Section 23-A. Mortgage modifications, evidence of pre-existing indebtedness

1.  Notwithstanding  the  provision  of any law, general or special, the
  supervising agency shall have the power to:
    (i) assign or pledge or contract to  assign  or  pledge  any  mortgage
  securing  a  loan,  including  any loan to finance the construction of a
  project, and any note or bond evidencing indebtedness thereon,  made  by
  the  municipality in accordance with the provisions of this article, and
  any  contract  or  arrangement,  including  any  subsidy   contract   or
  arrangement,  relating  to such mortgage, and the receipts to be derived
  from any of the foregoing, and may reacquire or accept and  contract  to
  reacquire   or  accept  any  such  mortgage,  note,  bond,  contract  or
  arrangement, including any mortgage, note, bond, contract or arrangement
  made in substitution thereof, and the receipts to be derived  therefrom,
  or
    (ii)  consent to and contract for the modification of any of the terms
  of a mortgage, and note  or  bond  secured  thereby,  made  pursuant  to
  section  twenty-three  of  this  chapter  for  the  purpose of obtaining
  insurance of such mortgage loan by the federal government  in  order  to
  refinance all or any part of the indebtedness evidenced by such mortgage
  and note or bond, or
    (iii)  satisfy  such mortgage in order to enable the company to obtain
  insurance by the federal government of a  mortgage  loan  made  for  the
  purpose  of refinancing all or any part of the indebtedness evidenced by
  such mortgage and note or bond.
    2. In the event that the existing mortgage loan is satisfied  pursuant
  to  this  section,  the  supervising  agency may in consideration of the
  issuance of such satisfaction accept a new mortgage  and  note  or  bond
  insured  by  the  federal  government  in an amount equal to the maximum
  principal amount of a mortgage loan the federal government  will  insure
  or  accept  the proceeds available to the housing company as a result of
  the refinancing.
    3. In the event that  there  is  residual  indebtedness,  the  housing
  company  shall  make  and  the  supervising  agency  shall  accept  such
  instruments evidencing such indebtedness  as  may  be  required  by  the
  supervising  agency as are consistent with the provisions of subdivision
  fifteen of section twelve of this chapter, in such form  and  upon  such
  terms as the supervising agency may approve. In the event that there are
  residual  receipts  obligations,  the  housing  company may make and the
  supervising agency may accept instruments evidencing such obligations in
  accordance with the provisions of subdivision sixteen of section  twelve
  of this chapter.
    4.  Notwithstanding  any  other  provisions  of  this  article  or any
  general, special or local law, where the supervising agency has made the
  findings required in subdivision one of section  twenty-six  or  section
  twenty-six-a   and  where  a  project  has  been  approved  pursuant  to
  subdivision five of section twenty-six of this chapter, the  supervising
  agency  may  make  or contract to make a mortgage loan or exercise other
  related powers pursuant to this section  or  section  twenty-three-b  or
  subdivision  twenty-two-a  of  section  six  hundred  fifty-four of this
  chapter without further findings by the supervising  agency  or  further
  approval by the local legislative body.
    4-a.  Notwithstanding  the  provisions of this article or any general,
  special or local law to the contrary, where an existing mortgage loan is
  modified or satisfied pursuant  to  this  section  and  the  supervising
  agency has approved a new or modified mortgage or mortgages, including a
  mortgage  and  note  or  bond  insured  by  the federal government and a
  mortgage to secure residual indebtedness,  the  supervising  agency  may
  sell,  assign,  or  otherwise  dispose of, at public or private sale, on

  such terms  and  conditions  as  shall  be  deemed  appropriate  by  the
  supervising  agency  subject to the approval of the comptroller or chief
  fiscal officer of the municipality wherein such agency is located,  such
  new or modified mortgage or mortgages and related instruments.
    4-b.  Notwithstanding  the  provisions of this article or any general,
  special or local law to the contrary, where an existing mortgage loan is
  modified or satisfied pursuant to this section, the  supervising  agency
  may pay or incur fees, costs, expenses and other amounts, whether or not
  any  amounts  have  been  appropriated  therefor  in order to (1) meet a
  municipality's  obligations  under  an  agreement   with   the   federal
  government   on   account   of   mortgage  insurance,  provided  that  a
  municipality's share of any mortgage insurance claim paid by the federal
  government shall not exceed fifty percent of the insurance benefits paid
  by the federal government, and further provided  that  a  municipality's
  share  of  such  claims  under  any  contract  or contracts entered into
  between a municipality and the federal government shall not exceed  five
  percent  of  the  outstanding  principal  amount of all mortgages of the
  municipality at any time insured by the federal government and  included
  within  such  contract, (2) make loans for, or establish escrow accounts
  for the issuance of mortgage insurance, (3) absorb discounts  associated
  with  any  sale,  assignment  or other disposition of a mortgage note or
  bond insured by the federal government, (4) pay  fees  required  by  the
  federal   government  as  a  condition  for  the  issuance  of  mortgage
  insurance, (5) install such life safety devices and satisfy such minimum
  property standards, as may be required by the federal  government  which
  devices  or  standards are in addition to any requirement imposed by the
  municipality as mortgagee and to make loans for such purposes,  (6)  pay
  closing and other costs related to obtaining mortgage insurance from the
  federal  government,  (7)  permit  the municipality to issue obligations
  secured by such mortgage or mortgages, (8) meet such other costs as  the
  federal government may from time to time impose, (9) pay any amounts not
  previously  advanced under a mortgage or mortgages modified or satisfied
  pursuant to this section, and (10) hold an amount not to  exceed  twenty
  million  dollars at any one time in a revolving account for a period not
  to exceed eighteen months from the time of the first deposit therein, to
  pay fees, costs, expenses and other amounts attributable to  making  and
  insuring  mortgages  pursuant to this section or attributable to issuing
  obligations secured by such mortgages.   If the municipality  sells  any
  such mortgages insured by the federal government for an amount in excess
  of  the  principal  amount  thereof  at the time of such sale, or if the
  municipality issues obligations secured by any such  mortgages  and  the
  yield  on  such  mortgages is greater than the yield on such obligations
  (the yield on such mortgages and obligations having been  calculated  in
  accordance  with  section one hundred three of the internal revenue code
  of the United States and regulations thereunder), then any such  premium
  and any such differential may be used by the municipality for any lawful
  purpose,  provided,  however,  that an amount equal to the annual sum of
  such premium and such differential, to the extent such  differential  is
  not paid to or for the benefit of the holders of such obligations, shall
  be credited annually by the municipality, at such times as determined by
  the  supervising  agency, as a payment by all municipally-aided projects
  then having residual  indebtedness,  of  the  then  accrued  and  unpaid
  interest  on  such  residual  indebtedness.  To the extent that any such
  credit otherwise allocable to a  project  in  any  year  exceeds  unpaid
  interest on the residual indebtedness of such project in that year, such
  excess  credit  shall  be  allocated  among  all other eligible projects
  having accrued and unpaid interest  on  residual  indebtedness  in  that
  year.  Notwithstanding  the provisions of the foregoing sentence of this

  subdivision, if an eligible project has made cash payments in  any  year
  for  the  sum  of  (i)  interest on and principal of a federally insured
  mortgage and (ii) interest on and principal of residual indebtedness and
  (iii)  all other payments on account of such insured mortgage, including
  mortgage insurance premium and reserves, at least equal to  the  sum  of
  (i)  interest  and  principal  which would have been due annually on the
  original mortgage loan for the project, at the interest rate  in  effect
  at  the  time  the  project  is  refinanced, and (ii) all other required
  annual payments on account of  such  original  mortgage  loan,  such  as
  reserve  requirements, then any excess credit allocable to such eligible
  project shall be credited in the next succeeding year as  a  payment  of
  interest  on  residual  indebtedness  of  such  project  before any cash
  payment is required to  be  made  for  such  interest.  Subject  to  the
  provisions  of  the preceding sentence of this subdivision, if the total
  of such credit in any year available for all eligible  projects  exceeds
  the  total  of  all accrued and unpaid interest in that year on residual
  indebtedness of all eligible projects then having residual indebtedness,
  an amount equal to such excess  credit  shall  be  carried  forward  and
  credited  in future years as a payment of accrued and unpaid interest on
  residual indebtedness of eligible projects in future  years  until  such
  time  as no further interest remains unpaid with respect to any residual
  indebtedness of eligible projects.  The supervising agency shall  divide
  such  credit  among  eligible  projects  on  the basis of the respective
  original  principal  amounts  of  the  federally  insured  mortgages  on
  eligible   projects;  provided,  however,  that  such  credit  shall  be
  allocated to projects which receive federal subsidies only to the extent
  that  such  subsidies  are  not  thereby  reduced.  When  there   is   a
  participation, new loan or investment pursuant to section twenty-three-b
  of this article for which the consent of a company is required and which
  will  be  substantially  equivalent to a refinancing pursuant to section
  twenty-three-a  or  subdivision  twenty-two-a  of  section  six  hundred
  fifty-four  of  this  article, then for purposes of this subdivision the
  interest of the municipality  after  such  participation,  new  loan  or
  investment  which  is  secured  by  a mortgage shall be deemed to be the
  equivalent of residual indebtedness and  the  interest  of  entities  or
  organizations  other  than  the  municipality in such participation, new
  loan or investment shall be deemed to be the equivalent of  a  federally
  insured mortgage.
    5.  No  company  shall  accept  a  mortgage  loan to be insured by the
  federal government made for the  purpose  of  refinancing  the  existing
  mortgage  loan  of  a company which shall exceed the amount which can be
  supported by the income derived from the operation of the project at the
  rental rate determined by the supervising agency that would be necessary
  to meet all necessary payments  to  be  made  by  the  company,  of  all
  expenses  including fixed charges, sinking funds, reserves and dividends
  on outstanding stock, as authorized by the supervising  agency,  if  the
  principal amount of the original mortgage loan of the company were to be
  fully  repaid  over the term of such mortgage loan by constant and equal
  payments of principal and interest and  if  the  interest  rate  on  the
  company's  original  mortgage  loan  was  eight and one-half percent per
  annum or, where the original mortgage loan provides for the  payment  of
  interest  at  a maximum rate of less than eight and one-half percent per
  annum, such maximum amount.
    6. A company shall not accept a mortgage to be insured by the  federal
  government for the purpose of refinancing an existing mortgage loan of a
  municipally-aided  project  unless  the  sum  of  interest and principal
  payable in respect of  such  mortgage  to  be  insured  by  the  federal
  government and in respect of any residual indebtedness, over the term of

  such  mortgage  and residual indebtedness, shall be no more than the sum
  of interest and principal that  would  be  payable  in  respect  of  the
  existing mortgage loan, over the term of such existing mortgage loan, at
  an  interest  rate  of eight and one-half percent per annum or where the
  existing mortgage loan provides for a maximum interest rate of less than
  eight and one-half percent, at such maximum interest rate.
    7. The terms of any  mortgage  securing  residual  indebtedness  of  a
  municipally-aided  project  shall include a provision to the effect that
  so long as the project is subject to a mortgage insured or held  by  the
  federal  government  (a)  interest  on  and  principal  of such mortgage
  securing residual indebtedness shall be  payable  only  if  and  to  the
  extent  to  which  surplus  cash,  as  defined in a regulatory agreement
  excecuted  by  the  housing  company  and  the  federal  government,  is
  available,  and  (b)  the  failure to pay interest and principal on such
  mortgage securing residual indebtedness shall not constitute an event of
  default unless surplus  cash  is  available  and  not  applied  to  such
  payments of interest and principal.
    8.  Ten  days  before an initial application is filed with the federal
  government to obtain insurance by the federal government of  a  mortgage
  for  the purpose of refinancing all or any part of a mortgage loan for a
  municipally-aided  project  pursuant  to   section   twenty-three-a   or
  subdivision  twenty-two-a  of  section  six  hundred  fifty-four of this
  chapter, the supervising agency shall (a) mail to the president or other
  representative of the  tenants'  association  or  cooperators'  advisory
  council, recognized by the supervising agency for such municipally-aided
  project, written notice of the proposed refinancing, including a copy of
  such   initial  application,  and  (b)  make  a  copy  of  such  initial
  application  available  at  its  offices  during  business  hours,   for
  inspection  and  copying  by  the  residents  of  such municipally-aided
  project. Ten days before the closing of a  proposed  participation,  new
  loan  or investment with respect to a municipally-aided project pursuant
  to section twenty-three-b of this article, the supervising agency  shall
  (a)  mail  to  the  president  or  other  representative of the tenants'
  association  or  cooperators'  advisory  council,  recognized   by   the
  supervising agency for such municipally-aided project, written notice of
  such proposed participation, new loan or investment, including a summary
  of  the  principal  terms and conditions thereof, and (b) make a copy of
  such summary  available  at  its  offices  during  business  hours,  for
  inspection  and  copying  by  the  residents  of  such municipally-aided
  project. The unintentional failure of the supervising agency  to  comply
  with  the  foregoing provisions of this subdivision shall not invalidate
  or otherwise affect any such refinancing of a mortgage loan or any  such
  participation, new loan or investment.