Amends chapter 208 of the laws of 2010 and extends the provisions of chapter 208 of the laws of 2010 amending the public authorities law relating to the powers of the state of New York mortgage agency

BILL NUMBER:S7146

Title of bill

An act to amend the public authorities law, in relation to government sponsored enterprises; and to amend chapter 208 of the laws of 2010 amending the public authorities law relating to the powers of the state of New York mortgage agency, in relation to extending the provisions thereof

Purpose of the Bill:

This bill would extend to July 23, 2015 legislation defining government sponsored enterprises ("GSE") in connection with the second lien program of the State of New York Mortgage Agency ("SONYMA"). The bill also amends the definition of GSE to include differently chartered entities created by Congress to replace the current GSEs in assuming the purposes currently served by the existing GSEs.

Summary of Provisions:

Section 1 of the bill would amend the definition of GSE.

Section 2 of the bill would extend until July 23, 2015, the present sunset date of December 31, 2014 with regard to the definition of government sponsored enterprises.

Section 3 of the bill provides for an immediate effective date.

Existing Law:

SONYMA is authorized through December 31, 2014 to purchase second mortgage loans made simultaneously and with respect to the same secured property as a first or senior mortgage that is purchased by a GSE.

GSEs are defined as privately owned, publicly chartered entities created by Congress to encourage lending and reduce costs primarily in the housing sector of the economy.

Prior Legislative History:

See Chapter 327 of the Laws of 2012, Chapter 208 of the Laws of 2010 and Chapter 432 of the Laws of 2009.

Statement in Support:

In 2010 SONYMA was authorized to purchase and insure second mortgages in the following limited circumstance: where the second mortgage is made simultaneously and with respect to the same secured property as a first or senior mortgage that is purchased by a GSE. In 2012, SONYMA was authorized to originate loans secured by mortgages secured by a second lien in cases where the second lien: (i) secures a mortgage loan purchased by SONYMA, and (ii) is made at the same time as a first lien securing a mortgage loan purchased by SONYMA pursuant to its programs or by a GSE.

In order for this power to continue, the definition of GSEs, which currently sunsets in December 2014, must be extended.

The definition also needs to be revised, since Congress is currently considering legislation that would replace the current GSEs with a new entity created by the federal government that would assume a number of the purposes currently served by GSEs, but with different statutory frameworks. If this legislation passes, the current GSE definition would no longer cover the new, proposed entity.

In order to continue the applicability of the GSE vehicle, and permit SONYMA to continue its programs uninterrupted, the bill would amend the definition to cover any such successor entities, as long as those entities are still charged with encouraging lending and reducing costs in the housing sector.

Budget Implications:

None.

Local Impact:

None.

Effective Date:

This bill would take effect immediately.