Section 2405*2. Purchase of mortgages

(1) The purpose of the  agency  shall
  be to purchase mortgages from banks within the state during periods when
  there  is  an  inadequate supply of credit available for new residential
  mortgage loans and to require such banks to invest an  amount  equal  to
  the  proceeds  thereof  as  rapidly  as  possible  in  new  mortgages on
  residential real property for family units within the state.
    It is hereby found and declared that such  activities  by  the  agency
  will alleviate a condition of affairs in this state which is contrary to
  the  public health, safety and general welfare and which has constituted
  in the past and from time to time in  the  future  can  be  expected  to
  constitute  a  public  emergency.  It is further found and declared that

  such purposes are in all respects for the benefit of the people  of  the
  state  of  New  York  and  the agency shall be regarded as performing an
  essential governmental function in carrying  out  its  purposes  and  in
  exercising the powers granted by this title.
    (2)  The agency shall purchase mortgages from banks at such prices and
  upon such terms and conditions as it shall determine; provided, however,
  that the total purchase price for all mortgages which the agency commits
  to purchase from a bank at any one time shall in no event be  more  than
  the total of the unpaid principal balances thereof.
    (3)  (a)  The  agency  shall  require  as  a  condition of purchase of
  mortgages from banks that such banks shall, within such period as may be
  approved by the agency not in excess of ninety days of  receipt  of  the
  purchase price, enter into written commitments to loan and shall, within
  such  period  as  may be approved by the agency, loan an amount equal to
  the entire purchase price of such mortgages on new mortgages within  the
  state having such terms as the agency may prescribe.
    (b)  (i)  The  proportionate  dollar  amount  of commitments from each
  agency issue of bonds or notes used to purchase mortgages from banks  in
  each  region  of the state, as such regions are set forth in subdivision
  nine of section twenty-four hundred  twenty-six  of  this  title  shall,
  subject  to  subparagraph  (ii)  hereof, reflect the proportion that the
  number of families in each region bears to the number of families in the
  state as a whole.
    (ii) To the extent that the reasonable demand by banks in  any  region
  is  insufficient  to  accommodate  the  proportion of an agency issue of
  bonds or notes determined pursuant to subparagraph (i) hereof  for  such
  region,  the  agency  shall use reasonable efforts to purchase mortgages
  such that the excess funds from such region are  distributed  among  the
  other  regions  in  proportion  to  the  relative  reasonable demand. In
  determining reasonable demand, the agency shall  consider,  among  other
  things,  historical  demand  for  mortgages  in such regions, the dollar
  amount of offers by banks to  sell  mortgages  to  the  agency  and  the
  reasonableness  of  such offers, considering the size, mortgage history,
  total assets, liquidity and financial ability of the bank to conform  to
  the  contract  of  sale  and the bank's record of compliance with agency
  requirements.
    (iii) The agency shall use its best efforts to the end that  not  less
  than  one-sixth  in  dollar  amount  of new mortgages resulting from its
  program  of  purchasing  mortgages  shall  be   on   newly   constructed
  residences.  A  newly  constructed residence is defined as a one to four
  family dwelling not previously occupied.
    (iv) During the time that the  agency  is  accepting  offers  to  sell
  mortgages  from  banks,  the  agency  shall  advertise, in newspapers of
  general circulation within the state, the  fact  that  it  is  accepting
  offers  from  banks, and such other information as the agency determines
  to be helpful in generating maximum participation by banks and potential
  mortgagors. All banks within each such region shall be  invited  by  the
  agency  to  participate  in  the agency's purchase of mortgages from the
  proceeds of the sale of each issue by the agency of its bonds and notes.
  The allocation of the proceeds of each such agency issue among the banks
  requesting  participation  within  each  region  shall,  to  the  extent
  practicable,  maximize  the  number  of  banks  which  participate.  Any
  commitment between the agency and a bank shall  require  that  the  bank
  provide  the agency with such information, as may be deemed necessary by
  the agency, for the agency to assure that the requirements of this title
  or any other requirements imposed by the  agency  with  respect  to  the
  purchase  of mortgages with the proceeds of any agency issue of bonds or
  notes has been fulfilled.

    (c) No commitment to loan or loan on  a  mortgage  secured  or  to  be
  secured  by  a  multiple  dwelling  shall  satisfy  the  requirement  of
  paragraph (a) of this subdivision unless the prior written  approval  of
  such commitment shall have been obtained from the agency. The agency may
  refuse  to  approve  any  commitment to lend on such a multiple dwelling
  mortgage if so required by the terms of any bonding resolution and shall
  not approve any commitment to lend on such a multiple dwelling  mortgage
  if  the  approval thereof would increase the total dollar amount of such
  commitments on multiple dwelling mortgages approved by the agency to  an
  amount  in  excess  of  forty percent of the total purchase price of all
  mortgages theretofor purchased by the agency pursuant to this section.
    (4) In the case of individual borrowers, such new mortgages shall bear
  interest computed in  accordance  with  section  5-501  of  the  general
  obligations  law  (whether  or  not  insured or guaranteed by the United
  States of America or any agency thereof) at a rate which does not exceed
  the maximum interest rate, if any, set by the agency for such mortgages.
  The agency may set such a maximum interest  rate  chargeable  individual
  borrowers  on  such new loans, notwithstanding the maximum interest rate
  fixed by section 5-501 of the general obligations law, at the rate  that
  the  mortgages  purchased by the agency were discounted to yield plus an
  interest differential, not in excess of one percent per annum, which the
  agency from time to time shall determine to be adequate consideration to
  induce such banks to sell existing mortgages to the agency and  to  loan
  an  amount  equal to the proceeds on new mortgages in furtherance of the
  purposes of and subject to the conditions of this title. In the case  of
  corporate  borrowers,  such  new mortgages shall bear interest at a rate
  not substantially lower  than  the  rate  of  interest  that  banks  are
  charging  at  the  time  of commitment on comparable new mortgage loans.
  Each such bank shall annually account and pay over to the agency  or  to
  the  New  York  state  housing finance agency for deposit in and for the
  purposes of the low rent lease account as set forth  in  paragraphs  (a)
  and  (b)  of  subdivision  four  of  section forty-four-a of the private
  housing finance law or any successor entity as the agency may direct, or
  to both the agency and the New York state  housing  finance  agency  for
  such  deposit and purposes in such proportions as the agency may direct,
  an amount equal to the  difference  between  (a)  the  total  amount  of
  interest  (which  shall  include all charges to individual and corporate
  borrowers that would be treated as interest under section 5-501  of  the
  general  obligations  law  and  any  regulations  of  the  banking board
  pursuant to section fourteen-a of the banking law) received by it during
  the preceding year on all such new mortgages and (b) the total amount of
  interest which such mortgages would have yielded if the interest thereon
  had been at the maximum rate chargeable individual borrowers on such new
  loans plus an additional interest differential, not  in  excess  of  one
  percent per annum, determined by the agency to be adequate consideration
  to induce participating banks to make new loans on multiple dwellings.
    (5)  The  agency  shall require the submission to it by each bank from
  which the agency has purchased mortgages evidence  satisfactory  to  the
  agency of the making of new mortgage loans and of paying over to the low
  rent  lease  account  as  required  by  this  section  and in connection
  therewith may, through its employees or agents or those of  the  banking
  department, inspect the books and records of any such bank.
    (6)  Compliance  by  any  bank with the terms of its agreement with or
  undertaking to the agency with respect to the  making  of  any  mortgage
  loans  and  of paying over to the low rent lease account may be enforced
  by decree of the supreme court. The agency may require as a condition of
  purchase of mortgages from any national banking association the  consent
  of  such  association  to the jurisdiction of the supreme court over any

  such proceeding. The agency may also require agreement by any bank, as a
  condition of the agency's purchase of mortgages from such bank,  to  the
  payment  of  penalties  to  the  agency for violation by the bank of its
  undertakings  to  the agency, and such penalties shall be recoverable at
  the suit of the agency.
    (7) The agency shall  require  as  a  condition  of  purchase  of  any
  mortgage  from  a bank that the bank represent and warrant to the agency
  that
    (a) the unpaid principal balance of the mortgage and the interest rate
  thereon have been accurately stated to the agency;
    (b) the amount of the unpaid  principal  balance  is  justly  due  and
  owing;
    (c)  the  bank  has  no  notice  of the existence of any counterclaim,
  offset or  defense  asserted  by  the  mortgagor  or  his  successor  in
  interest;
    (d)  the  mortgage  is  evidenced  by  a bond or promissory note and a
  mortgage document which has been properly recorded with the  appropriate
  public official;
    (e)  the  mortgage constitutes a valid first lien on the real property
  described to the agency subject only to real property taxes not yet due,
  installments of assessments not yet due, and easements and  restrictions
  of  record  which do not adversely affect, to a material degree, the use
  or value of the real property or improvements thereon;
    (f) the mortgage loan when made was lawful under the  banking  law  or
  federal  law,  whichever  governs  the affairs of the bank, and would be
  lawful on the date of purchase by the agency if made by the bank on that
  date in the amount of the then unpaid principal balance;
    (g) the mortgagor is  not  now  in  default  in  the  payment  of  any
  installment  of principal or interest, escrow funds, real property taxes
  or otherwise in the performance of his obligations  under  the  mortgage
  documents  and  has  not to the knowledge of the bank been in default in
  the performance of any such obligation for a period of longer than sixty
  days during the life of the mortgage, and
    (h) the improvements to the mortgaged real property are covered  by  a
  valid  and subsisting policy of insurance issued by a company authorized
  by the superintendent of insurance to issue such policies in  the  state
  of  New  York  and providing fire and extended coverage to an amount not
  less than eighty percent of the insurable value of the  improvements  to
  the mortgaged real property.
    (8)  Each  bank shall be liable to the agency for any damages suffered
  by the agency by reason of the untruth  of  any  representation  or  the
  breach  of  any warranty and, in the event that any representation shall
  prove to be untrue when made or in the event of any breach of  warranty,
  the bank shall, at the option of the agency, repurchase the mortgage for
  the  original  purchase  price  adjusted  for  amounts subsequently paid
  thereon, as the agency may determine.
    (9) The agency need not require the recording of an assignment of  any
  mortgage  purchased by it from a bank pursuant to this section and shall
  not be required to notify the mortgagor of its purchase of the mortgage.
  The agency shall not be required to inspect or take  possession  of  the
  mortgage  documents  if the bank from which the mortgage is purchased by
  the agency shall enter a contract to service such mortgage  and  account
  to the agency therefor.
    (10) The agency shall maintain a continuous review of the availability
  of  funds  in  regular  banking  channels for new mortgage loans. In the
  event that the agency shall determine that an adequate supply  of  funds
  exists  in  regular  banking  channels for new mortgage loans the agency
  shall not authorize the issuance of bonds for the purchase of  mortgages

  except  refunding  bonds,  until such time as the agency shall determine
  that the supply of funds available for mortgages  is  again  inadequate.
  The  agency  shall  notify  the governor, the temporary president of the
  senate,  and the speaker of the assembly of any determination that there
  is an inadequate supply of funds available  for  mortgages  made  by  it
  under  this subdivision. Discontinuance by the agency of the purchase of
  mortgages pursuant to a determination that an adequate supply  of  funds
  exists  in  regular banking channels shall not constitute, or in any way
  effect, termination of the agency as  provided  in  subdivision  six  of
  section two thousand four hundred three of this title.
    * NB Effective July 16, 2010