Section 2428. Insurance of mortgages

1. The agency is authorized, subject to
  the  provisions  of  this  article, to make commitments to insure and to
  contract to insure mortgage loans eligible for insurance hereunder.
    * 1-a. The agency may issue commitments to  provide  and  may  provide
  pool  insurance in an amount not in excess of twenty-five percent of the
  outstanding principal indebtedness at the  time  of  commitment  of  any
  aggregate  of  mortgage loans or with respect to mortgage loans acquired
  pursuant  to  section  twenty-four  hundred  five-b   of   this   title,
  twenty-five  percent  of  the  initial  principal  indebtedness  of  any
  aggregate of mortgage loans.
    * NB Repealed July 16, 2011
    2. The agency  shall  limit  its  insurance  on  a  rehabilitation  or
  preservation  loan to an amount not in excess of fifty per centum of the
  outstanding principal indebtedness, provided, however, that  the  agency
  may  insure  an  amount  not in excess of seventy-five per centum of the
  outstanding principal indebtedness of a rehabilitation loan if it  shall
  find, pursuant to rules or regulations which it shall establish that the
  extent  of  rehabilitation  is  sufficient  to  justify  such additional
  insurance, provided further, however, that  the  agency  may  insure  an
  amount  equal  to  the  full outstanding principal indebtedness when the
  loan has been made by a public benefit corporation of the state  of  New
  York  which public benefit corporation has issued or will issue bonds or
  notes, some or all of the proceeds of which bonds or notes were used  or
  will  be  used  to  make  such loan, or when the loan has been made by a
  public employee pension fund.
    However, the sum of the percentage of any mortgage loan insured by the
  agency and the percentage of such loan insured or to be insured  by  any
  other  party  shall not exceed one hundred per centum of the outstanding
  principal indebtedness.
    * 3. Except for pool insurance, and except as  otherwise  provided  in
  subdivision  three-a  of  this  section,  the  agency  shall not issue a
  commitment to insure nor shall it insure any loan unless it shall  first
  find  (a)  that  the  property  which  is  the security for such loan is
  located in a neighborhood characterized by  a  deficiency  of  available
  mortgage  financing; (b) that such deficiency has caused or threatens to
  cause  undermaintained  and  deteriorating  housing  accommodations  and
  substandard  and insanitary neighborhoods; (c) that the granting of such
  loan will aid in the preservation or rehabilitation of the  neighborhood
  in  which  such  property  is  located; (d) if the property which is the
  security for such loan is not a housing accommodation, that the granting
  of such loan will assist in  preventing  the  deterioration  of  housing
  accommodations  in  the  neighborhood in which such property is located;
  (e) that the sum of (i) twenty percentum or such  percentum  as  may  be
  established  by the board of the agency pursuant to subdivision seven of
  this section, of the amount of such loan which is to  be  insured,  plus
  (ii)  the  amount  of  the  mortgage  insurance fund requirement for the
  category of loan does not exceed the amount  available  in  the  special
  account;  and  (f) that the property which is the security for such loan
  meets such other requirements as  the  agency  may  from  time  to  time
  establish by guidelines adopted by the agency.
    The  agency shall not issue a commitment to provide pool insurance nor
  shall it provide such insurance unless it shall first find (a) that  the
  sum  of  (i) twenty per centum, or such per centum as may be established
  by the board of  the  agency  pursuant  to  subdivision  seven  of  this
  section,  of  the amount of such loans or aggregate of loans which is to
  be insured,  plus  (ii)  the  amount  of  the  mortgage  insurance  fund
  requirement  for  the  category  of  loan  does  not  exceed  the amount
  available in the pool insurance account; and (b) that the property which

  is the security for such loan or loans meets such other requirements  as
  the  agency may from time to time establish by guidelines adopted by the
  agency.
    The agency may issue a commitment to insure and may insure an existing
  loan,  first  when an application for such mortgage insurance is pending
  prior to the making of a loan, when significant circumstances beyond the
  reasonable control of the mortgagor and mortgagee necessitate the making
  of the loan prior to the issuance of the commitment to insure  and  when
  it  is  determined by the agency that such loan would not have been made
  except for the reasonable expectation that the agency would  insure  the
  loan,  or  second,  as  part  of  a  transaction  in which the financial
  institution requesting insurance makes additional loan  or  loans  which
  qualify  for  insurance  by the agency, in accordance with provisions of
  this section and requirements established by  the  agency,  in  a  total
  amount  such that the uninsured portion of such additional loan or loans
  equals or exceeds the insured portion of such existing loan or loans.
    * NB Effective until July 16, 2011
    * 3. The agency shall not issue a commitment to insure  nor  shall  it
  insure  any  loan unless it shall first find (a) that the property which
  is the security for such loan is located in a neighborhood characterized
  by  a  deficiency  of  available  mortgage  financing;  (b)  that   such
  deficiency   has  caused  or  threatens  to  cause  undermaintained  and
  deteriorating housing  accommodations  and  substandard  and  insanitary
  neighborhoods;  (c)  that  the  granting  of  such  loan will aid in the
  preservation  or  rehabilitation  of  the  neighborhood  in  which  such
  property  is located; (d) if the property which is the security for such
  loan is not a housing accommodation, that the granting of such loan will
  assist in preventing the deterioration of housing accommodations in  the
  neighborhood  in which such property is located; (e) that the sum of (i)
  twenty percentum or such percentum as may be established by the board of
  the agency pursuant to subdivision seven of this section, of the  amount
  of  such  loan  which  is  to  be  insured,  plus (ii) the amount of the
  mortgage insurance fund requirement for the category of  loan  does  not
  exceed  the  amount  available  in the special account; and (f) that the
  property  which  is  the  security  for  such  loan  meets  such   other
  requirements  as the agency may from time to time establish by rules and
  regulations.
    The agency may issue a commitment to insure and may insure an existing
  loan, first when an application for such mortgage insurance  is  pending
  prior to the making of a loan, when significant circumstances beyond the
  reasonable control of the mortgagor and mortgagee necessitate the making
  of  the  loan prior to the issuance of the commitment to insure and when
  it is determined by the agency that such loan would not have  been  made
  except  for  the reasonable expectation that the agency would insure the
  loan, or second, as  part  of  a  transaction  in  which  the  financial
  institution  requesting  insurance  makes additional loan or loans which
  qualify for insurance by the agency, in accordance  with  provisions  of
  this  section  and  requirements  established  by the agency, in a total
  amount such that the uninsured portion of such additional loan or  loans
  equals or exceeds the insured portion of such existing loan or loans.
    * NB Effective July 16, 2011
    * 3-a.  The agency may issue a commitment to insure and may insure any
  loans or aggregate of loans and may issue a commitment  to  provide  and
  may  provide mortgage pool insurance on any loans or aggregate of loans,
  notwithstanding the criteria set forth in subparagraph (a), (b), (c)  or
  (d)  of  the  opening  paragraph  of  subdivision  three of this section
  provided that it shall find that the property which is the security  for
  such  loan  or  loans  is  either:  (a)  located  within  an empire zone

  designated pursuant to article eighteen-B of the general municipal  law,
  or  (b) will provide affordable housing, or (c) the entity providing the
  project's mortgage financing was  or  is  created  by  local,  state  or
  federal  legislation  and certifies to the agency that the project meets
  the program criteria applicable to  such  entity,  or  (d)  providing  a
  retail  or  community  service  facility  that  would  not  otherwise be
  provided.
    * NB Repealed July 16, 2011
    3-b. Notwithstanding any other provision of law to the contrary,  when
  such  insurance  is  not available through the private market the agency
  may insure reverse mortgage loans which meet the following conditions:
    (a) the authorized lender requires primary mortgage insurance  on  the
  real  property  and  the  applicant  is  unable to procure such mortgage
  insurance in the private market;
    (b) the reverse mortgage  loan  is  issued  pursuant  to  section  two
  hundred eighty or two hundred eighty-a of the real property law;
    (c)  the  reverse  mortgage  loan  amount shall not exceed the loan to
  value ratio as may be determined by the banking board; and
    (d) the real property which is the security for such reverse  mortgage
  loan  meets  such other requirements as the agency may from time to time
  establish.
    * 4. To be eligible for insurance under this article, a mortgage  loan
  shall  (a)  (i)  be  a first lien of the kind which is commonly given to
  secure advances on, or the unpaid purchase price of, real property under
  the laws of the  state  together  with  any  credit  instrument  secured
  thereby  or  (ii)  be  secured  by  an  assignment  or transfer of stock
  certificates or other evidence of ownership interest of the borrower in,
  and a proprietary lease from, a corporation formed for  the  purpose  of
  the  cooperative  ownership of residential real estate in the state; (b)
  secure a rehabilitation or preservation loan on real  property  held  in
  fee simple or on a leasehold under a proprietary lease or a lease having
  a  period of years to run at the time the mortgage is insured under this
  article of  at  least  twenty  per  centum  greater  duration  than  the
  remaining  term  of  the  mortgage;  (c)  contain  terms with respect to
  prepayment, insurance, repairs, alterations, payment of  taxes,  special
  assessments,  service  charge  default  reserves,  delinquency  charges,
  foreclosure proceedings, additional and secondary liens, and such  other
  matters   as  the  agency  may  in  its  discretion  prescribe;  (d)  be
  accompanied by certificates, issued by such  officers  of  the  mortgage
  financial  institutions,  independent appraisers or other persons as the
  agency may require, certifying that (i) where  appropriate,  the  annual
  income  to be derived from the property equals not less than one hundred
  and five per centum  of  the  annual  charges  and  expenses,  including
  provision for reserves, satisfactory to the agency, for the amortization
  of  subordinate  mortgage  loans  over the remaining terms of such loans
  notwithstanding the provisions thereof; (ii) the remaining  useful  life
  of  the property is greater than the term of the mortgage; and (iii) the
  property does not contain any substantial violations of  local  building
  maintenance  and  construction  codes, except that in the case of a loan
  made to the owner of a property  containing  any  such  violations,  the
  agency may insure or commit to insure such loan if the mortgagee and the
  owner  have  submitted  a  plan, satisfactory to the agency to eliminate
  such violations and the issuance of such insurance shall be  conditioned
  on  removal  of  such  violations  to the satisfaction of the local code
  enforcement agency; and (e) satisfy such additional terms and conditions
  as the agency may prescribe. For pool  insurance,  the  requirements  of
  paragraph (b) of this subdivision shall not be applicable.
    * NB Effective until July 16, 2011

    * 4.  To be eligible for insurance under this article, a mortgage loan
  shall (a) (i) be a first lien of the kind which  is  commonly  given  to
  secure advances on, or the unpaid purchase price of, real property under
  the  laws  of  the  state  together  with  any credit instrument secured
  thereby  or  (ii)  be  secured  by  an  assignment  or transfer of stock
  certificates or other evidence of ownership interest of the borrower in,
  and a proprietary lease from, a corporation formed for  the  purpose  of
  the  cooperative  ownership of residential real estate in the state; (b)
  secure a rehabilitation or preservation loan on real  property  held  in
  fee simple or on a leasehold under a proprietary lease or a lease having
  a  period of years to run at the time the mortgage is insured under this
  article of  at  least  twenty  per  centum  greater  duration  than  the
  remaining  term  of  the  mortgage;  (c)  contain  terms with respect to
  prepayment, insurance, repairs, alterations, payment of  taxes,  special
  assessments,  service  charge  default  reserves,  delinquency  charges,
  foreclosure proceedings, additional and secondary liens, and such  other
  matters   as  the  agency  may  in  its  discretion  prescribe;  (d)  be
  accompanied by certificates, issued by such  officers  of  the  mortgage
  financial  institutions,  independent appraisers or other persons as the
  agency may require, certifying that (i) where  appropriate,  the  annual
  income  to be derived from the property equals not less than one hundred
  and five per centum  of  the  annual  charges  and  expenses,  including
  provision for reserves, satisfactory to the agency, for the amortization
  of  subordinate  mortgage  loans  over the remaining terms of such loans
  notwithstanding the provisions thereof; (ii) the remaining  useful  life
  of  the property is greater than the term of the mortgage; and (iii) the
  property does not contain any substantial violations of  local  building
  maintenance  and  construction  codes, except that in the case of a loan
  made to the owner of a property  containing  any  such  violations,  the
  agency may insure or commit to insure such loan if the mortgagee and the
  owner  have  submitted  a  plan, satisfactory to the agency to eliminate
  such violations and the issuance of such insurance shall be  conditioned
  on  removal  of  such  violations  to the satisfaction of the local code
  enforcement agency; and (e) satisfy such additional terms and conditions
  as the agency may prescribe.
    * NB Effective July 16, 2011
    5. In addition to the conditions set forth in subdivisions  three  and
  four of this section, the agency shall not insure nor issue a commitment
  to  insure  any  rehabilitation  loan  unless  it  shall first find that
  rehabilitation  is  necessary  to  upgrade   the   property   and   that
  rehabilitation  will  not  necessitate  more  than  a  minimum amount of
  relocation of the residents of any housing accommodation.
    6.  A  financial  institution  may  request   insurance   by   written
  application  to  the  agency in such form and manner, together with such
  information and documents, as the agency may prescribe.  No  application
  shall  be  complete  unless and until the financial institution has paid
  such processing fees and other charges  as  the  agency  may  impose  in
  connection  therewith.  The  agency shall signify its acceptance of such
  application for insurance by issuance of a commitment  to  insure  or  a
  contract of insurance.
    7.  * (a) The board of directors of the agency may, from time to time,
  by vote of a majority of all of  its  members,  establish  a  percentage
  greater  than  the  per  centum  set  in  subdivision  five  of  section
  twenty-four hundred twenty-six of this title  for  any  or  all  of  the
  following categories of loans insurable by the agency or for one or more
  loans  within  such categories: one to four family dwellings one unit of
  which is owner-occupied; one to four  family  dwellings  which  are  not
  owner-occupied;  five  or  more  family  dwellings;  proprietary leases;

  condominiums; loans secured by other real property; loans  purchased  or
  to  be purchased by the agency with proceeds of bonds or notes issued by
  the agency; loans securing bonds or notes issued by  the  agency;  loans
  covered  by  pool  insurance;  or, combinations thereof. The board shall
  specify such  percentage  and  shall  specify  the  date  on  which  the
  establishment of such percentage shall take effect as to (i) commitments
  issued  on or after such date and (ii) nothing contained in this section
  shall be construed to prohibit the board of directors of the agency from
  reducing the per centum used in calculating the mortgage insurance  fund
  requirement,  provided  such new per centum is not less than that set in
  subdivision five of  section  twenty-four  hundred  twenty-six  of  this
  title.
    * NB Effective until July 16, 2011
    * (a)  The board of directors of the agency may, from time to time, by
  vote of a majority of all of its members, establish a  percentage  other
  than  the  percentum  set  in  subdivision  five  of section twenty-four
  hundred twenty-six of this chapter for  any  or  all  of  the  following
  categories  of  loans  insurable by the agency: single family residences
  which  are  owner-occupied;  single  family  residences  which  are  not
  owner-occupied;    multi-family    residences;    proprietary    leases;
  condominiums and loans secured by other real property; or,  combinations
  thereof.  The  board  shall specify such percentage in multiples of five
  and shall specify the date on which the establishment of such percentage
  shall take effect as to commitments issued on or after such date.
    * NB Effective July 16, 2011
    (b) No change in the amount  of  moneys  which  must  be  held  in  or
  credited  to  the  mortgage  insurance fund pursuant to paragraph (a) of
  this subdivision shall have force or effect until the  governor  of  the
  state  of  New York shall have an opportunity to approve or veto it. For
  the purpose of procuring such approval or veto,  the  secretary  of  the
  board  shall transmit to the governor at the executive chamber in Albany
  a certified copy of that portion of the minutes of the  meeting  of  the
  board  in  which  such change was discussed and voted upon as soon after
  the holding of such meeting as the minutes can be prepared. The governor
  shall, within  thirty  days,  Saturdays,  Sundays  and  public  holidays
  excepted,  after such minutes shall have been delivered at the executive
  chamber as aforesaid, cause the same to be returned to the board  either
  with  his  approval  or  with  his  veto, provided, however, that if the
  governor shall not return such minutes within such period  then  at  the
  expiration  thereof  the  change therein authorized will have full force
  and effect according to the wording thereof. If the governor within such
  period returns such minutes with a veto against the  change,  then  such
  change shall be null and void.
    * 8. Notwithstanding any contrary provisions of this article or of any
  other  law,  rule or regulation, on and after the effective date of this
  subdivision;
    (a) Except for pool insurance, the agency shall not issue a commitment
  to insure nor shall it provide loan insurance for  any  loan  if  twenty
  percent  (or  such  other  percentage  as may be established pursuant to
  subdivision seven of this section) of the amount to be  insured  exceeds
  ten  percent  of  the  mortgage insurance fund requirement for all loans
  insured and loans for which commitments to insure have  been  issued  at
  that time.
    (b) If less than fifty percent, or none of the space of the project is
  or  is  to  be  used  for  residential purposes, the amount of such loan
  insurance shall not  exceed  five  million  dollars  and  no  such  loan
  insurance  may be issued unless the agency finds that the space which is
  to be used for other than residential purposes is to be used to  provide

  the  residents  of  the  neighborhood  with retail and community service
  facilities which would not otherwise be provided. The provisions of this
  paragraph shall not apply to loan insurance for projects  which  provide
  temporary shelter for homeless persons or community health facilities.
    (c)  The  agency  shall  not issue a commitment to insure nor shall it
  provide loan insurance for a preservation loan unless (i) such  loan  is
  made with respect to a one to four family dwelling; or (ii) such loan is
  made  with  respect  to  a building, which on the effective date of this
  subparagraph, is owned by a cooperative housing corporation  formed  for
  the  purpose  of the cooperative ownership of residential real estate in
  the state where such refinancing is not  otherwise  available  and  such
  loan   will   facilitate   or   accommodate   affordable   homeownership
  opportunities; or (iii) such loan is  made  with  respect  to  the  real
  property  and  improvements  owned  by a cooperative housing corporation
  formed for the purpose  of  the  cooperative  ownership  of  residential
  manufactured  homes in the state where such refinancing is not otherwise
  available and  such  loan  will  facilitate  or  accommodate  affordable
  homeownership opportunities.
    * NB Effective until July 16, 2011
    * 8. Notwithstanding any contrary provisions of this article or of any
  other  law,  rule or regulation, on and after the effective date of this
  subdivision;
    (a) The agency shall not issue a commitment to  insure  nor  shall  it
  provide  loan  insurance  for  an  amount in excess of the lesser of ten
  million dollars or forty percent of the amount of money  on  deposit  in
  the mortgage insurance fund at that time.
    (b) If less than fifty percent, or none of the space of the project is
  or  is  to  be  used  for  residential purposes, the amount of such loan
  insurance shall not  exceed  five  million  dollars  and  no  such  loan
  insurance  may be issued unless the agency finds that the space which is
  to be used for other than residential purposes is to be used to  provide
  the  residents  of  the  neighborhood  with retail and community service
  facilities which would not otherwise be provided.
    (c) The agency shall not issue a commitment to  insure  nor  shall  it
  provide  loan insurance for a preservation loan unless such loan is made
  with respect to a one to four family dwelling.
    * NB Effective July 16, 2011