Section 22. State loans

1. The commissioner may enter into contracts for
  loans to a company.  All such contracts shall be subject to approval  by
  the state comptroller and by the attorney general as to form.
    2.  Loans  by  the  state  under such a contract shall be secured by a
  first mortgage lien, and no such loan shall be made in an amount greater
  than ninety-five per centum of the total project cost in the case  of  a
  mutual   company,   urban   rental   company  or  a  non-profit  company
  incorporated  pursuant  to  the   provisions   of   the   not-for-profit
  corporation  law  and  this article for the purpose of providing housing
  for staff members, employees  or  students  of  a  college,  university,
  hospital  or  child care institution and their immediate families and in
  the  case  of  a  non-profit  company  incorporated  pursuant   to   the
  not-for-profit  corporation  law  and  this  article  for the purpose of
  providing housing for aged or handicapped persons of low  income  or  in
  the case of a low income non-profit housing company such loans shall not
  be  made  in an amount greater than the total project cost. In case of a
  loan in an amount greater than  ninety-five  per  centum  of  the  total
  project   cost,   the   commissioner   may  in  his  discretion  require
  satisfactory  independent  guarantees  that  the  loan  will  be  repaid
  according  to  the  terms  of  the  company's bond or note and mortgage.
  Notwithstanding any other provisions of law, if the company proposes  to
  sell  or convey any part or parts of the mortgaged premises prior to the
  sale by the state of the definitive bonds providing the  funds  for  the
  state  loan,  the  comptroller,  upon the application of the company and
  with the prior written consent of the commissioner, may release from the
  first mortgage lien any part or parts  of  the  mortgaged  premises  not
  acquired through condemnation and not required for the project, provided
  that  any  net proceeds from the sale or conveyance of the said property
  will be held by the  company  for  the  sole  purpose  of  reducing,  in
  accordance  with  the  requirements of the commissioner and comptroller,
  the principal amount of the state loan outstanding, and provided further
  that the unpaid principal amount of the state loan then outstanding,  as
  it  may be reduced by the net proceeds, if any, derived from the sale or
  conveyance, would not be in  an  amount  greater  than  ninety-five  per
  centum of the total project cost and in the case of a non-profit company
  incorporated   pursuant   to   the   provisions  of  the  not-for-profit
  corporation law and this article for the purpose  of  providing  housing
  for  aged  or  handicapped persons of low income or in the case of a low
  income non-profit housing company such amount shall not be greater  than
  the  total  project  cost. The comptroller shall execute such release in
  the usual form, which, when  acknowledged,  shall  be  recorded  by  the
  county  clerk and a minute thereof made upon a margin of the mortgage. A
  company may, with the prior written consent  of  the  commissioner,  and
  subject  to  the approval of the state comptroller and to the provisions
  of any contract with noteholders and bondholders, lease any property not
  acquired through condemnation and not required for the project, and  may
  apply  the  income  of  such  lease  to any use authorized for any other
  rental income. Such lease shall  contain  restrictions  to  protect  and
  preserve the project.
    3.  The commissioner may make temporary loans or advances to a company
  in anticipation of any permanent loans and no such  temporary  loans  or
  advances  shall  be  deemed  to  constitute part of such permanent loans
  unless such temporary loans or  advances  have  been  made  out  of  the
  proceeds  of  definitive  housing  bonds  sold  by the state pursuant to
  chapters four hundred seven of the laws of nineteen  hundred  fifty-five
  and nine hundred fifty-six of the laws of nineteen hundred fifty-eight.
    4.  The state shall have the power to invest jointly with the New York
  state housing finance agency in a bond or note and single  participating

  mortgage,  or  in  separate  bonds  or  notes and mortgages of a company
  organized pursuant to the provisions of this article.  The  interest  of
  each shall have equal priority as to lien in proportion to the amount of
  loan so secured, but need not be equal as to interest rate, time or rate
  of  amortization  or  otherwise.  In  such a case the state, through the
  commissioner of housing, is authorized to make provision, either in  the
  mortgage  or  mortgages or by separate agreement, for the performance of
  such services as are generally performed by the New York  state  housing
  finance  agency itself owning and holding a mortgage. Any agreement made
  by the commissioner under this  subdivision  shall  be  subject  to  the
  approval of the state comptroller and the attorney general as to form.