Section 23-B. Participation in loan or investment

Notwithstanding any other
  provisions  of  this  article  or  of any general, special or local law,
  where a municipality has made or contracted to make a mortgage loan to a
  company to finance a project:  one  or  more  banking  organizations  as
  defined  in  subdivision  eleven  of  section  two  of  the banking law,
  educational  institutions,  hospitals,  medical   research   institutes,
  insurance  companies,  trustees  or  fiduciaries,  including fiduciaries
  holding funds for investment, the  New  York  city  housing  development
  corporation,   other   public  corporations,  or  other  entities  which
  purchase, invest, or deal in first mortgage loans in the  normal  course
  of  their  business, or any combination of the foregoing, shall have the
  power to participate in such loan or make or participate in a  new  loan
  secured  by  a  bond  or note and a single participating mortgage, or by
  separate bonds or notes and separate mortgages, or to invest, singly  or
  jointly,   with   the   municipality  in  a  bond  or  note  and  single
  participating mortgage or in separate bonds or notes and mortgages or in
  a new mortgage or mortgages with respect to all or a portion of the loan
  by a municipality to a company; and the supervising  agency  shall  have
  the  power,  upon  the  mortgagor's  consent,  to  modify  the terms and
  conditions of the original bond or bonds or note or notes  and  mortgage
  or  mortgages  and  any other documents executed in connection with such
  original loan, as the supervising agency may deem necessary or desirable
  to provide for such participation, new loan or investment as provided in
  this section, including but not limited to (i) modification of the  rate
  and time of payment of interest on the original loan or rate and time of
  amortization  of  principal  thereof,  (ii)  providing  for priority for
  payment of the principal of and interest on that portion of the mortgage
  indebtedness attributable to such participation, new loan or  investment
  by one or more of such entities or organizations, (iii) subordination of
  the  interest of the municipality to the interest of one or more of such
  organizations or entities in such participation, new loan or investment,
  and (iv) otherwise  providing  that  the  interest  of  each  upon  such
  participation,  new  loan or investment need not be of equal priority as
  to lien, or be equal as to interest rate, time or rate  of  amortization
  of  principal  or  time  of  payment of interest or otherwise; provided,
  however, that the aggregate amount of the loan or  loans  to  a  company
  does  not  exceed the amount authorized pursuant to section twenty-three
  of this  article.  When  consent  of  a  company  is  required  for  any
  participation,  new loan or investment pursuant to this section and such
  participation, new loan or investment will be  substantially  equivalent
  to  a  refinancing of indebtedness pursuant to section twenty-three-a or
  subdivision twenty-two-a of  section  six  hundred  fifty-four  of  this
  chapter,  then;  (i)  the  provisions of this article, including without
  limitation the provisions  of  section  twenty-three-a,  limiting  total
  indebtedness  of  a  company  after  a  refinancing shall apply to total
  indebtedness of the  company  after  such  participation,  new  loan  or
  investment; (ii) the provisions of this article applicable to a mortgage
  of  a  company insured by the federal government in connection with such
  refinancing shall apply to a mortgage securing the interest of  entities
  or  organizations other than the municipality in such participation, new
  loan or investment; (iii) the  provisions  of  this  article  concerning
  residual indebtedness, such residual indebtedness having been calculated
  as  if  the  mortgage referred to in clause (ii) of this sentence were a
  federally  insured  mortgage,  shall  apply  to  an  interest   of   the
  municipality  after  such participation, new loan or investment which is
  secured by a mortgage; (iv) the provisions of  this  article  concerning
  residual  receipts  obligations  shall  apply  to  an  interest  of  the
  municipality after such participation, new loan or investment  which  is

  unsecured,  and  (v)  the  provisions  of  subdivision four-b of section
  twenty-three-a of this article concerning the credit referred to therein
  shall apply in a manner consistent with such subdivision.  For  purposes
  of  the  foregoing  sentence  of  this  section,  the  term surplus cash
  (referred to in subdivision seven  of  section  twenty-three-a  of  this
  article)  shall  be  applied  by  the  supervising  agency  in  a manner
  consistent with the definition of such  term  in  regulatory  agreements
  with  the  federal  government  for  the  refinancing of indebtedness of
  municipally-aided projects.  The provisions of subdivisions one and five
  of  section  twenty-six  of  this  article  shall  not  apply  to   such
  participation  in  a  loan  or  investment  pursuant  to this section if
  undertaken in connection with a project theretofore approved pursuant to
  section twenty-six of this article. Where the  municipality  shall  join
  with  one  or  more  organizations of the kind hereinabove mentioned, in
  making a loan secured by a single participating mortgage or by  separate
  mortgages,  the  municipality  is  authorized,  through  its supervising
  agency, to make provision, either in the mortgage  or  mortgages  or  by
  separate  agreement,  for  the  performance  of  such  services  as  are
  generally performed by a banking institution or insurance company  which
  itself owns and holds a mortgage or by a trustee under a trust mortgage.
  The  supervising  agency  is  hereby  authorized to act as trustee or to
  consent to the appointment of a  banking  institution  to  act  in  such
  capacity.   In connection with any participation in a loan or investment
  pursuant to this  section,  the  municipality  through  its  supervising
  agency shall have the power to assign or pledge, in whole or in part, to
  one  or more of the organizations or entities participating in such loan
  or investment its right, title and interest in and to any mortgage  held
  by  it  pursuant to this article and any contract or arrangement for the
  payment of subsidy relating to such mortgage,  including  the  right  to
  receive and apply to repayment of such loan and the interest thereon any
  receipts to be derived by it from such mortgage or from such contract or
  arrangement.