Relates to powers of the New York state housing finance agency

This bill increases the bonding authority of the New York State Housing Finance Agency ("HFA") by $3 billion to a maximum aggregate of $2.1.780 billion; and extends certain statutory authorizations of HFA, the State of New York Mortgage Agency ("SONYMA") and SONYMA Mortgage Insurance Fund ("MIF")

Summary of Provisions:

HFA

Section 1 of the bill increases the HFA bonding authority by $3 billion to a maximum aggregate of $21.780 billion.

Sections 2 and 3 of the bill extend HFA's authority to finance certain multi-family housing projects until July 23, 2017.

SONYMA

Section 4 of the bill extends SONYMA's authority to purchase forward commitment mortgages until July 23, 2017

Section 5 of the bill extends SONYMA's authority to issue new money taxable and tax-exempt bonds until July 23, 2017.

MIF

Section 6 of the bill extends until July 23, 2017 the sunset date of (i) sections six and nine through seventeen of legislation enacted in 1989 that broadened the scope of the MIF to provide primary mortgage insurance on a statewide basis to individual homeowners and to provide pool insurance to all of SONYMA's loans, and (ii) section 13 of legislation enacted in 2004 concerning development corporation credit support relating to the Jacob Javits Convention Center

Section 7 of the bill extends until July 23, 2017 the sunset date of the requirement that at least 20% of a rehabilitation loan given by SONYMA be used for rehabilitation or constriction of improvements.

Section 8 of the bill extends until July 23, 2017 the sunset date with regard to the definition of government sponsored enterprises ("GSE")

Section 9 of the bill extends until July 23, 2017 the sunset date with regard to the authorization of the MIF to provide one hundred percent mortgage insurance on certain loans extended for the sole purpose of refinancing existing indebtedness which relates to over leveraged multi-family residential buildings.

Section 10 of the bill provides for an immediate effective date.

Existing Law:

HFA

HFA's current bonding authority is $18.780 billion. HFA's authority to finance certain multi-family housing projects is scheduled to sunset on July 23, 2015.

SONYMA

Under existing law, SONYMA's authority to purchase forward commitment mortgages and to issue new money taxable and tax-exempt bonds is scheduled to sunset on July 23, 2015

SONYMA is authorized through July, 23, 2015 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.

MIF

Chapter 55 of the Laws of 1989, as amended, authorizes the MIF to provide primary mortgage insurance on a statewide basis to individual homeowners and to provide pool insurance to all of SONYMA's loans and is scheduled to sunset on July 23, 2015. Chapter 3 of the Laws of 2004, as amended, enabling SONYMA to provide credit support for the Jacob Javits Convention Center, is scheduled to sunset on July 23, 2015.

SONYMA is authorized through July 23, 2015 to insure rehabilitation loans, which are defined in Public Authorities Law § 2426 (12) as loans wherein at least 20% of the mortgage loan amount is attributable to the cost of rehabilitation or construction of improvements.

The MIF is authorized through July 23, 2015 to provide one hundred percent mortgage insurance on certain loans extended for the sole purpose of refinancing existing indebtedness which relates to over-leveraged multi-family residential buildings.

Prior Legislative History:

HFA

See Chapter 283 of the Laws of 2014; Chapter 152 of the Laws of 2013; Chapter 419 of the Laws of 2012; Chapter 100 of the Laws of 2011; Chapter 407 of the laws of 2010; See Chapter 176 of the Laws of 2009; Chapter 151 of the laws of 2008; Chapter 85 of the Laws of 2007; Chapter 398 of the Laws of 2006; Chapter 124 of the Laws of 2005; Chapter 204 of the Laws of 2004; Chapter 99 of the Laws of 2003; Chapter 48 of the Laws of 2002; Chapter 363 of the Laws of 2001; and Chapter 131 of the Laws of 2000.

SONYMA

See Chapter 152 of the Laws of 2013; Chapter 100 of the Laws of 2011; Chapter 218 of the Laws of 2010; Chapter 177 of the Laws of 2009; Chapter 148 of the Laws of 2008; Chapter 227 of the Laws of 2007; Chapter 138 of the Laws of 2006; Chapter 121 of the Laws of 2005; Chapter 147 of the Laws of 2004; Chapter 141 of the Laws of 2003; Chapter 103 of the Laws of 2002; Chapter 111 of the Laws of 2001; and Chapter 132 of the Laws of 2000

MIF

See Chapter 280 of the Laws of 2014; Chapter 68 of the Laws of 2014; Chapter 152 of the Laws of 2013; Chapter 162 of the Laws of 2012; Chapter 100 of the Laws of 2011; Chapter 246 of the Laws of 2010; Chapter 162 of the Laws of 2010; Chapter 192 of the Laws of 2009; Chapter 150 of the Laws of 2008; Chapter 230 of the Laws of 2007; Chapter 137 of the Laws of 2006; Chapter 125 of the Laws of 2005; Chapter 309 of the Laws of 2005; Chapter 145 of the Laws of 2003; Chapter 172 of the Laws of 2002; and Chapter 110 of the Laws of 2001.

Statement in Support:

HFA

This bill would increase the maximum amount of new money bonds which HFA is authorized to issue and would extend HFA's authority to finance certain multifamily housing projects until July 23, 2017. The Agency currently has a substantial pipeline of financing requests that will result in both the creation and preservation of affordable housing across New York State. The bill would increase HFA's authority to issue bonds by $3 billion for a maximum aggregate of $21.780 billion, which will enable the Agency to continue to meet the housing demands of New Yorkers, as well as help create jobs and provide economic stimulus.

SONYMA

SONYMA's statutory authorizations to issue new money tax-exempt bonds and to purchase forward commitment mortgages are scheduled to sunset on July 23, 2015. SONYMA' s statutory authorization to issue new money taxable bonds is also scheduled to sunset on July 23, 2015. This bill would extend the sunset dates for the issuance of new money tax-exempt bonds and new money taxable bonds, and for the purchase of forward commitment mortgages until July 23, 2017.

In 2010 SONYMA was authorized to purchase and insure second mortgages 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 to be exercisable by SONYMA, the definition of GSEs, which currently sunsets in July of 2015, must be extended until July 23, 2017.

MIF

Enactment of Chapter 555 of the Laws of 1989 and of Chapter 3 of the Laws of 2004 enabled SONYMA to provide primary mortgage insurance on a statewide basis, provide pool insurance for mortgages on one-to-four family homes and on multi-family projects where the loans are made by lenders who meet certain criteria and to provide credit support to the Jacob Javits Convention Center. However, these provisions will sunset on July 23, 2015. The bill extends theme sunset provisions until July 23, 2017.

Without an extension, the MIF will only be able to insure mortgages for projects located in "blighted" neighborhoods and provide per project mortgage insurance in amounts not exceeding $5 million or $10 million depending upon project type In addition, the MIF will be unable to provide primary mortgage insurance, pool insurance and credit support.

SONYMA' s primary tool for promoting new construction and rehabilitation of affordable housing is its authority to insure Rehabilitation Loans. The statutory authority that reduced the percentage of a rehabilitation loan that must be attributable by SONYMA to the cost of rehabilitation or new improvements from 25% to 20% of the mortgage loan is set to expire on July 23, 2015 and must be extended until July 23, 2017.

The 25% requirement is inconsistent with the provisions of the Internal Revenue Code ("Code") concerning the issuance of tax-exempt bonds for multifamily housing. Under the Code a minimum of 15% of such bonds must fund construction or rehabilitation costs. Several of the most important users of SONYMA's mortgage insurance are public benefit corporations, such as the New York State Housing Finance Agency, that issue tax-exempt bonds subject to the standards set by the Code. The 25% requirement also encourages lenders and borrowers to "pad" prospective loans with additional improvements not otherwise necessary for the project so that they are eligible under the definition of Rehabilitation Loan.

The reduction of the percentage requirement from 25% to 20% has resulted in SONYMA's insurance product matching more closely the needs of some of its primary users without in any way negatively affecting the programmatic or financial integrity of the Mortgage Insurance Fund.

The bill would extend the authority of the MIF to provide one hundred percent mortgage insurance on certain loans extended for the sole purpose of refinancing existing indebtedness which relates to over leveraged multi-family buildings. In order for this power to be exercisable by MIF, the provision, which currently sunsets on July 23, 2015, must be extended until July 23, 2017.

Budget Implications: None.

Local Impact: None.

Effective Date: This bill takes effect immediately.