Authorizes the state of New York mortgage agency to invest fund in Government National Mortgage Association mortgage backed securities

Title of bill

An act to amend the public authorities law, in relation to modernizing the investment powers of the state of New York mortgage agency

Purpose of the bill

The bill would add one investment vehicle to the State of New York Mortgage Agency Mortgage Insurance Fund ("MIF") to permit the MIF to invest in Government National Mortgage Association mortgage backed securities.

Summary of provisions

Section 1 of the bill would amend subdivision (9) of section 2427 of the SONYMA statute to expand SONYMA's MIF authority to invest in Government National Mortgage Association mortgage backed securities.

Section 2 of the bill would amend subdivision (4) of section 2429-b of the SONYMA statute to provide the MIF's mortgage insurance fund account with authority to invest in Government National Mortgage Association mortgage backed securities.

Section 3 of the bill would provide for an immediate effective date.

Statement in support

The MIF's mission, to provide mortgage insurance in support of affordable housing in New York State, has never been more important. The MIF generates premiums and invests them, and also invests its required reserves. The types of investments that are authorized under its operating statutes are similar to those found in the sections of the SONYMA statute dealing with the mortgage program activities, and have not been revised in decades.

As a result, the MIF's investments have typically been the most conservative investments available. Regardless of investment cycles, the MIF has invested most of its funds in U.S. Treasury securities. The earnings have been minimal, particularly during the recent investment cycle. The MIF's ability to support affordable housing would be enhanced by being able to invest its funds in investments that produce greater revenues. The current authorized investments, unchanged for years, do not suffice.

This bill would authorize the MIF to invest in Government National Mortgage Association mortgage backed securities ("Ginnie Mae securities"). Ginnie Mae securities are explicitly backed by the full faith and credit of the U.S. Government; and Ginnie Mae is a self-sustaining, profitable and wholly-owned government corporation located within the U.S. Department of Housing and Urban Development (HUD). A number of public authorities in the State are authorized to invest in Ginnie Mae securities. They include the Battery Park City Authority, the New York State Thruway Authority, the New York State Environmental Facilities Corporation, as well as the New York City Housing Development Corporation.

Prior legislative history

In 2013, a bill was introduced proposing a limited expansion in investment authority only with respect to MIF (A.3007-C of 2013). In 2007, a bill proposing a limited expansion in investment authority only with respect to SONYMA (S.3969) was referred to the Senate Corporations, Authorities and Commissions Committee.

Local impact

This bill would have no impact on local governments.

Fiscal implications

None.

Effective date

This bill would take effect immediately.