Section 304. Purposes, powers and operation

1.  The  purpose  of  the
  corporation shall be to assist, promote,  encourage  and  stimulate  the
  development  and rehabilitation of blighted areas by rendering financial
  assistance in the construction, rehabilitation or  purchase  of  housing
  accommodations in blighted or deteriorating urban areas in this state by
  making first mortgage loans in areas designated by the corporation, such
  loans  to  be made on a sound economic basis by the application of sound
  mortgage lending principles.
    2. It is not the intention or the purpose of the powers herein granted
  to take from banking  or  insurance  organizations  any  such  loans  or
  commitments  as  may  be  desired by such organizations generally in the
  ordinary  course  of  their  business;  provided   however,   that   the
  corporation  need  not  make any specific inquiry or find as a fact that
  any banking or insurance organization desires to make any such loan.
    3. In furtherance of the purpose set forth in subdivision one of  this
  section,  and  in addition to the powers conferred on stock corporations
  by general laws, the corporation shall, subject to the restrictions  and
  limitations contained in this article, have the following powers:
    (a) To issue and sell for cash capital stock of the corporation.
    (b)  To  issue and sell its debentures bearing such interest rates and
  having such  maturities  and  other  terms  and  provisions  as  may  be
  determined by the board of directors of the corporation.
    (c)  To  invest  in  bonds  and  mortgages or notes and mortgages upon
  improved  and  unencumbered  real  property  in  areas  in  this   state
  designated  by  the  board  of directors of the corporation as blighted,
  over-crowded,  or  deteriorating  areas,  subject   to   the   following
  conditions:
    (i)  The  board  of  directors shall be satisfied with respect to each
  loan that it is economically sound.
    (ii) No such loan shall be in an amount in excess of eighty per centum
  of the corporation's appraised value of such real property, except  that
  such loan may exceed eighty per centum when guaranteed or insured by the
  federal government or any agency thereof.
    (iii)  Any  appraisal of such property shall be based on its long-term
  economic value with due consideration being given, among other  factors,
  to  its  physical  maintenance  and,  in  the  case  of income-producing
  properties, to  its  stabilized  rental  value  after  adequate  vacancy
  allowances.  Except  in  cases  of  new  construction no appraisal of an
  income-producing property shall be undertaken by the corporation  unless
  it  has  first  been  supplied by the loan applicant with a current rent
  roll and statement of income and expense  for  the  twelve-month  period
  preceding  the  date  of  the  loan  application, certified by such loan
  applicant and in form and substance satisfactory to the corporation.
    (iv) No loan shall be  made  on  any  existing  housing  accommodation
  unless   (a)   such  housing  accommodation  is  in  physical  condition
  satisfactory to the corporation or (b) the loan applicant  is  committed
  to restore such housing accommodation to satisfactory condition prior to
  the  loan  closing,  or,  at the discretion of the corporation, within a
  specified period after closing, out of the proceeds of the loan.
    (v) No loan shall be made on a housing accommodation unless  (a)  such
  housing  accommodation has a suitable heating system satisfactory to the
  corporation, or (b) the loan applicant is committed to install  suitable
  heating facilities out of the proceeds of such loan.
    (vi)  Any such loan shall be for one or more of the following purposes
  only:
    A. To finance the improvement or rehabilitation of an existing housing
  accommodation.

    B.  To  consolidate,  refinance   or   liquidate   existing   mortgage
  indebtedness on a housing accommodation.
    C.  To  finance  the  bona  fide  purchase of a housing accommodation,
  provided that except in cases of loans  insured  or  guaranteed  by  the
  federal  government  or  any  agency  thereof, the purchaser of the real
  property which is to constitute the security for the proposed  loan  has
  paid to the seller in cash an amount equal to at least twenty per centum
  of the purchase price of such real property.
    D. To finance the construction of new housing accommodations.
    (vii)  The  board  of  directors  of the corporation shall cause to be
  included in  each  mortgage  the  following  protective  provisions  and
  restrictions  (in  addition  to  those contained in the statutory form M
  mortgage  with  lien  covenant  as  contained  in  section  two  hundred
  fifty-eight  of the real property law), provided that any and all of the
  said provisions and restrictions may be waived by the corporation  where
  the corporation is purchasing or otherwise acquiring an already existing
  mortgage:
    A.  A  provision  requiring  the mortgagor to obtain the prior written
  consent of the holder of the first  mortgage  to  the  creation  of  any
  junior  liens,  charges  or encumbrances affecting the real property. In
  its sole and absolute discretion the corporation may modify or waive the
  inclusion of this provision in any mortgage.
    B. A provision requiring the mortgagor to accumulate and maintain with
  the holder of the first mortgage, so long as the mortgage is held by it,
  a fund for the proper repair and maintenance of the mortgaged  premises.
  The  amount and type of such fund and conditions under which it shall be
  accumulated, applied and replenished shall be specified in the mortgage.
  Such fund may be applied from time to time to the repair or  maintenance
  of  the property by the mortgagor with the written consent of the holder
  of the first mortgage. Such fund shall be applied by  the  mortgagor  at
  the  direction of such holder, when such application is deemed necessary
  by such holder for the reasonable protection of  the  property.  In  its
  sole  and absolute discretion the corporation may waive the inclusion of
  this provision in any mortgage.
    C. A provision permitting the mortgagor to repay the principal  amount
  of the loan or any part thereof at any time without penalty, except that
  the mortgage may, in the discretion of the board of directors, contain a
  provision  for  a prepayment penalty not exceeding two per centum of any
  amount repaid within three years  after  the  closing  of  the  loan  in
  addition  to  such regular repayments without penalty as may be provided
  in the mortgage.
    (viii) No loan shall be  made  by  the  corporation  unless  the  real
  property  which  is  to  secure such loan is, or upon application of the
  loan proceeds will be, unencumbered, and the corporation shall have been
  furnished with satisfactory evidence that such real property is or  upon
  application  of  the  loan  proceeds  will  be  in  compliance  with all
  applicable laws, ordinances  and  regulations  of  governments,  whether
  federal,  state,  county  or municipal, or agencies or instrumentalities
  thereof, having jurisdiction.
    (ix) Such other and further conditions as the board  of  directors  in
  its  sole  and absolute discretion may deem advisable in the interest of
  conducting the affairs of  the  corporation  in  accordance  with  sound
  economic and mortgage lending principles.
    (x)  The mortgage shall provide that violation of any of the foregoing
  conditions by the  mortgagor  shall  constitute  an  event  of  default,
  entitling the holder of the first mortgage to accelerate maturity of the
  mortgage obligation.

    (xi)  The  mortgage  shall  provide  for  maturity  of  the  loan  and
  amortization thereof at such rate as shall be deemed appropriate by  the
  board  of  directors in accordance with sound mortgage lending practice,
  provided that except in cases of loans  insured  or  guaranteed  by  the
  federal  government  or  any  agency  thereof,  no mortgage shall have a
  maturity in excess of twenty years from the date of closing.
    (xii) The enumeration herein, or in any lending rules  or  regulations
  promulgated  by  the  corporation, of conditions or criteria relating to
  the granting of any mortgage loan shall  impose  no  obligation  on  the
  corporation  to  grant  any  application  for a loan which fulfills such
  conditions or criteria. The authority of the corporation to decline  any
  loan  application  for  any  reason  whatsoever  shall  be  absolute and
  unconditional.
    (xiii) Nothing  contained  in  this  article  shall  be  construed  as
  signifying  a  legislative  intent  to  define  what constitutes prudent
  lending practice for banking, insurance or other organizations.
    (d) To  sell  without  recourse  bonds  and  mortgages  or  notes  and
  mortgages acquired pursuant to subdivision three (c) of this section, at
  such prices and upon such terms and conditions as the board of directors
  of  the  corporation  shall determine; to service or continue to service
  such bonds and mortgages and to manage such properties for  any  of  its
  members,  provided  that if the purchaser be a member, the said bond and
  mortgage or note and mortgage is in all respects eligible for investment
  by the particular member purchasing the same.
    (e) To acquire, subscribe for,  own,  hold,  sell,  assign,  transfer,
  pledge  or  otherwise  dispose  of obligations of the United States with
  maturities not in excess of three years.
    (f) For the purpose  of  protecting  its  interests,  to  release  any
  obligation  to pay or guarantee the payment of principal or interest, or
  otherwise to waive or modify any of the terms and conditions of any bond
  and mortgage, and of any note and mortgage, and to extend  or  re-extend
  any  bond  and  mortgage, and any note and mortgage, and to accept a sum
  less  than  the  principal  amount  thereof  in  the  full  payment  and
  satisfaction of the same.
    (g)  In addition to interest rates within legal limits the corporation
  may impose a service charge upon the mortgagor or owner which shall  not
  exceed two per centum of the total amount of the loan.
    (h)  To  apply  for status as an approved mortgagee under the national
  housing act and to act as a mortgagee under said act.
    4. The corporation shall have the power to  purchase,  receive,  hold,
  lease or otherwise acquire, and to sell, convey, mortgage, lease, pledge
  or  otherwise dispose of, upon such terms and conditions as its board of
  directors may deem advisable, real and personal property, together  with
  such  rights and privileges as may be incidental and appurtenant thereto
  and the use thereof, including, but  not  restricted  to,  any  real  or
  personal property acquired by such corporation, from time to time in the
  satisfaction  of  debts or enforcement of obligations, provided that the
  corporation may purchase or acquire only the following real estate:
    (a) Plots whereon there are or may be erected buildings  suitable  for
  the convenient transaction of the business of the corporation.
    (b)  Such  real property as shall be conveyed to it in satisfaction of
  debts previously contracted in the course of its business.
    (c) Such real estate as it shall purchase at  sales  under  judgments,
  decrees or mortgages held by it.
    (d) In lieu of instituting an action to foreclose a mortgage lien, the
  corporation may purchase a deed to the underlying real property.