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by such department. The burden of proof shall be on the recipient to
show by clear and convincing evidence that the required expenditures

have been made.

§ 24. Subdivision 1 of section 489-gggg of the real property tax law,
as added by chapter 966 of the laws of
1984, is amended to read as
follows:

1. Any recipient whose property is the subject of a certificate of eligibility for commercial or renovation construction work, and who, prior to the expiration of the benefit period, uses such property as industrial property, shall continue to receive benefits for commercial renovation construction work as the case may be.

or

§ 25. Subdivision 3 of section 489-gggg of the real property tax law, as added by chapter 966 of the laws of 1984, is amended to read as follows:

3. [Any] Except as provided in subdivision four of this section, any recipient whose property is the subject of a certificate of eligibility for commercial [or], industrial or renovation construction work, and who uses such property as residential property or for any restricted activity prior to the expiration of the benefit period, shall cease to be eligible for further exemption or deferral as of the date such property was first used as residential property or for any restricted activity. In the case of property in an area that was designated as an exemption area at the time the certificate of eligibility was issued, such recipient shall pay with interest any taxes for which an exemption was claimed after such date, including the pro rata share of tax for which any exemption was claimed during the tax year in which such use occurred. In the case of property in an area that was designated as a deferral area at the time the certificate of eligibility was issued, all deferred tax payments on the property shall become due and payable immediately.

$26. Section 489-gggg of the real property tax law is amended by adding a new subdivision 4 to read as follows:

subdivision three of this section, any recipient whose property is the subject of a certificate of eligibility for commercial or renovation construction work with an effective date of July first, nineteen hundred ninety-two or after, and who, prior to the expiration of the benefit period, uses a portion of such property as residential property, shall cease to be eligible for further exemption for commercial or renovation construction work for that portion of such property used as residential property as of the date such portion of the property was first used as residential property. Such recipient shall pay, with interest, any taxes for which an exemption was claimed after such date attributable to that portion of the property used as residential property, including the pro rata share of tax for which such exemption was claimed during the tax year in which such use occurred. Such recipient shall continue to receive an exempt ion for commercial or renovation construction work for that portion of the property which continues to be used as commercial property.

§ 27. Paragraphs (a) and (d) of subdivision 1 of section 489-hhhh of the real property tax law, as added by chapter 966 of the laws of 1984, are amended to read as follows:

(a) To publicize the availability of benefits pursuant to this title for industrial [and], commercial and renovation construction work.

(d) To enter and inspect property to determine whether it is industrial or commercial or mixed-use and to notify the tax commission whenever (i) any such property is being used [as residential property or] for any restricted use, [and whenever] or (ii) any property which is the subject of a certificate of eligibility for industrial construction work is being used as commercial property, or (iii) any industrial or commercial property is being used as residential or mixed-use property, or (iv) all or part of the nonresidential portion of mixed-use property is being used as residential property.

§ 28. Title 2-D of the real property tax law is amended by adding a new section 489-1111 to read as follows: EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

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§ 489-1111. Participation of minority and women-owned business enterprises. A city enacting a local law pursuant to this title may provide for a program to ensure meaningful participation of minority and womanowned business enterprises in construction work for which an applicant receives benefits. Such program may be established, and amended from time to time, by local law, or by rule of the department of finance not inconsistent with any such local law.

§ 29. This act shall take effect July 1, 1992, except that if it shall have become a law subsequent to such date, this act shall take effect immediately and shall be retroactive to and deemed to have been in full force and effect as of July 1, 1992.

CHAPTER 782

AN ACT to amend the public authorities law, in relation to the state of New York mortgage agency and to repeal certain provisions of the public authorities law relating thereto

Became a law August 7, 1992, with the approval of the Governor.
Passed by a majority vote, three-fifths being present.

The People of the State of New York, represented in Senate and Assenbly, do enact as follows:

Section 1. The fourth undesignated paragraph of section 2401 of the public authorities law, as amended by chapter 915 of the laws of 1982, is amended to read as follows:

to

Based upon the experience of the past, most recently during the periods of illiquidity which occurred in nineteen hundred sixty-six and again in nineteen hundred sixty-nine, shortages of funds for residential mortgages in the private banking system can be expected to recur from time to time in varying degrees of severity with the adverse consequences described above. To avoid or minimize such consequences, bring greater stability to the residential construction industry and related industries, and thus to assure a steady flow of production of new housing units, there should be created a corporate governmental agency to be known as the "state of New York mortgage agency" which, through issuance of bonds and notes to the private investing public during periods when there is an inadequate supply of credit available for new loans for residential housing and housing improvement purposes, may (i) purchase existing mortgages from banks and direct an amount equal to the proceeds from the liquidated mortgage investments into new mortgages on residential family dwelling units, (ii) purchase new mortgages on residential family dwelling units, [and] (iii) purchase new housing loans for the rehabilitation or improvement of residential family dwellng units, and (iv) purchase lease-to-own mortgage loans.

ing repealed.

2. Subdivision 9 of section 2403 of the public authorities law is

Subdivision 7 of section 2404 of the public authorities law, as amended by chapter 915 of the laws of 1982, is amended to read follows:

as

(7) To (a) acquire, and contract to acquire, existing mortgages owned by banks and to enter into advance commitments to banks for the purchase of said mortgages, all subject to the provisions of section two thousand four hundred five of this title, (b) acquire, and contract to acquire, forward commitment mortgages made by banks and to enter into advance commitments to banks for the purchase of said mortgages, all subject to the provisions of section two thousand four hundred five-b of this title, [and] (c) acquire, and contract to acquire, new housing loans made by banks and to enter into advance commitments to banks for the purchase of said housing loans, all subject to the provisions of section two thousand four hundred five-c of this title, and (d) to acquire and

* So in original. ("woman-owned" should be "women-owned".)

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contract to acquire mortgages pursuant to
five-d of this title;

section twenty-four hundred

in

§ 4. Subdivision 24 of section 2404 of the public authorities law, as added by chapter 897 of the laws of 1986, is amended to read as follows: (24) To establish and administer a mortgage credit certificate program, as defined in the internal revenue code of the United States, conformity with that and other applicable provisions of such code and any regulations issued thereunder by the United States department of the treasury, to issue mortgage credit certificates pursuant to such program, and to make all elections and determinations relating to such program, including without limitation, an election not to issue all or any portion of the [state ceiling amount of qualified mortgage bonds, as defined in such code and] private activity bond volume allocated to the agency [by subdivision niñe of section twenty-four hundred three of this title].

§ 5. Subdivision 28 of section 2404 of the public authorities law is renumbered subdivision 29 and a new subdivision 28 is added to read as follows:

(28) To establish and administer a lease-purchase program or programs in accordance with section twenty-four hundred five-d of this title. § 6. The public authorities law is amended by adding a new section 2405-d to read as follows:

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§ 2405-d. Lease-to-own program. (1) The agency is authorized to participate in lease-to-own programs as described in this section. The purpose of a lease-to-own program is to provide mortgage financing for a residence occupied as a primary residence by a prospective mortgagor pursuant to a lease-to-own contract with the owner of such property. The lease-to-own contract shall provide for the eventual purchase by the resident of the residence and an interim lease of the residence prior to the closing of the purchase thereof. The party to the lease-to-own tract who is the seller of the residence is referred to in this section as the "seller". The prospective purchaser who is a party to the leaseto-own contract is referred to in this section as the "tenantpurchaser". A "residence" for the purpose of this section is a singlefamily home, a condominium housing unit or a housing unit owned by a cooperative housing corporation.

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57637

(2) The agency may contract to acquire and may acquire a mortgage loan or loans made by a bank to a seller who has entered a lease-to-own contract with an eligible tenant-purchaser for the property which is the subject of and security for such mortgage loan.

(3) (a) The lease-to-own contract shall contain:

(i) a lease of the residence, or in the case of cooperative housing units a sublease, for a term not to exceed five years.

on

(ii) provision for a rental payment not less than the sum of (A) an amount sufficient to pay the estimated real property taxes and insurance the residence, or in the case of a cooperative unit, the maintenance charges; (B) the cost of routine maintenance of the residence unless the lease-to-own contract requires the tenant-purchaser to perform such maintenance at his own expense; (C) an amount sufficient to pay the interest on the mortgage loan held by the agency on the residence less the estimated earnings on the escrow fund provided for in subdivision four of this section which is allocable to such mortgage held by the agency; (D) an amount to be held in escrow, referred to as the "tenant-purchaser escrow", which, when accumulated over the period of the lease-to-own contract, will amount to a sum sufficient to pay the tenant-purchaser's required down payment under the lease-to-own contract plus the estimated closing costs of purchase which will be allocable to the tenantpurchaser, including the seller's closing costs at the initial closing of the mortgage to the seller; and (E) in the case of a condominium unit, common charges.

(iii) provisions obligating the tenant-purchaser to buy and the seller to sell the residence at the end of the lease term.

(iv) a provision under which the seller waives specific performance with respect to the tenant-purchaser's obligation to purchase. (v) a provision that default by the tenant-purchaser under the provisions of the lease-to-own contract shall result in the forfeiture to the seller of all amounts in the tenant-purchaser escrow.

(vi) a provision that the tenant-purchaser shall have the option upon reasonable notice to the seller and the agency to elect to close the EXPLANATION-Matter in italics is new; matter in brackets [] is old law

purchase of the residence at an earlier date than that specified in the lease-to-own contract.

(vii) a provision that the rent shall be adjusted under the lease-toown contract periodically to take account of changes in taxes, insurance, escrow earnings and other variables intended to be covered by the tenant's rental payment.

(viii) provision governing the consequences of default by each of the parties. (b) The provisions of the emergency housing rent control law, the local emergency housing rent control act, the city rent and rehabilitation law, the emergency tenant protection act of nineteen seventy-four and the New York city rent stabilization law of nineteen hundred sixtynine shall not apply to the tenancy of the tenant-purchaser under the lease-to-own contract from and after the purchase by the agency of the mortgage loan on the residence so long as the agency holds the mortgage loan. The agency shall not sell the mortgage loan prior to the closing of the transfer of title to the tenant-purchaser or default by the tenant-purchaser under the lease-to-own contract.

(c) The agency shall adopt procedures to ensure that the payments contemplated by subparagraph (ii) of paragraph (a) of this subdivision are in fact applied to those purposes.

(4) (a) The mortgage loan documents with respect to a mortgage loan acquired by the agency pursuant to this section shall provide that there shall be retained as additional security for the mortgage loan an amount not less than fifteen percent of the purchase price stated in the leaseto-own contract. The amount retained shall be disbursed in cash at the mortgage closing to an escrow fund held by the owner of the mortgage. When the agency becomes the owner of the mortgage loan, the agency shall receive the escrow amount to be held by the agency in escrow. The escrowed funds may be invested by the agency in securities in which the agency is authorized to invest its own funds. All banks and trust companies are authorized to give such security for deposits by the agency of escrowed funds as determined by the agency. The escrow amounts pertaining to various lease-to-own mortgage loans may be commingled for investment purposes, but the agency shall keep book's of account showing the amount to the credit of each individual escrow account. The investment earnings on each individual escrow account shall be credited to the interest payment on the applicable mortgage loan.

(b) The agency shall advise the seller at periodic convenient intervals of the amount of such earnings with respect to each mortgage loan. (5) With the agency's approval, the lease-to-own contract may provide that, so long as the seller is not in default, in lieu of the establishment of a tenant-purchaser escrow account, that the portion of the tenant-purchaser's rental payments allocable to such an account may be received by the seller first as reimbursement of the seller's costs of closing of the initial mortgage to the seller and, second, to be credited to the purchase price of the premises.

(6) (a) At the closing of the transfer of title to the residence to the tenant-purchaser pursuant to the lease-to-own contract, the agency shall disburse the escrow amount to or for the account of the tenantpurchaser.

(b) At such closing, the agency shall require the tenant-purchaser to furnish private mortgage insurance if such insurance is required in the case of other mortgage loans under this title. If such insurance is not obtainable in the private market at the time of such closing, the agency is authorized to issue such insurance.

(7) The agency shall establish such requirements with regard to leaseto-own contracts, lease-to-own residences, the qualifications of tenantpurchasers, and the agency's participation in any lease-to-own program, as may be deemed appropriate by the agency to achieve the objectives of this section. The agency's requirements, including but not limited to income limits applicable to the tenant-purchaser and the purchase price of the residence, must be satisfied at or before the time the mortgage loan is purchased, and the tenant-purchaser must be deemed qualified by the agency at the time.

(8) Notwithstanding any other provision of law, the agency is authorized to require, as a condition to the financing of any mortgage with respect to a lease-purchase residence, such restrictions upon assumability of the mortgage, default provisions, rights to accelerate, and other terms as the agency may determine to be necessary or desirable. All such terms shall be enforceable by the originating bank,

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the agency, and any successor holder of the mortgage unless expressly waived in writing by or on behalf of the agency.

(9) The provisions of this section shall expire and be of no further force and effect on and after July first, nineteen hundred ninety-five. § 7. Subdivision 4 of section 2406 of the public authorities law, as amended by chapter 120 of the laws of 1982, is amended to read as follows:

(4) Such bonds or notes shall bear such date or dates, shall mature at such time or times, shall bear interest at such rate or rates, shall be of such denominations, shall be in such form, carry such registration privileges, be executed in such manner, be payable in lawful money of the United States of America at such place or places within or without the state, be subject to such terms of redemption prior to maturity as may be provided by such resolution or resolutions or such certificate with respect to such bonds or notes, as the case may be; provided, however, that the maximum maturity of bonds shall not exceed [thirty-five] forty years from the date thereof and the maximum maturity of notes or any renewals thereof shall not exceed seven years from the date of the original issue of such notes.

or

§ 8. Subdivision 2 of section 2407 of the public authorities law, as amended by chapter 7 of the laws of 1992, is amended to read as follows: (2) In connection with the issuance of bonds for the purpose of furthering programs described in this title, the agency is authorized to covenant and consent that the interest on any of its bonds, notes or other obligations shall be includible, under the United States Internal Revenue Code of nineteen hundred eighty-six, as amended or any subsequent corresponding internal revenue law of the United States, in the gross income of the holders of the bonds to the same extent and in the same manner that the interest on bills, bonds, notes or other obligations of the United States is includible in the gross income of the holders thereof under said Internal Revenue Code or any such subsequent law. Pursuant to this subdivision, the agency shall not issue bonds, notes or other obligations in an aggregate principal amount exceeding three hundred million dollars, excluding from such limitation bonds, notes or other obligations issued to refund outstanding bonds, notes other obligations. No such bond, note or other obligation shall be issued by the agency on or after March thirty-first, nineteen hundred ninety-three, excluding bonds, notes or other obligations issued to refund outstanding bonds, notes or other obligations and no mortgages shall be purchased with the proceeds of such bonds, notes or other obligations after such date. The board of directors of the agency shall tablish program guidelines for purposes of bonds, notes or other obligations issued pursuant to this subdivision. The board of directors shall establish from time to time maximum income limits of persons eligible to receive mortgages (or tenant-purchasers as referred to in section twenty-four hundred five-d of this title) financed by bonds, notes or other obligations issued pursuant to this subdivision, which income limits with respect to one-third of the total principal amount of mortgages authorized to be so financed shall not exceed one hundred twenty-five percent of the latest maximum income limits permitted under the Internal Revenue Code of nineteen hundred eighty-six, as amended, for mortgagors financed by mortgage revenue bonds, with respect to one-third of such principal amount authorized to be so financed, shall not exceed one hundred thirty-five percent of such income limits, and with respect to onethird of such principal amount authorized to be so financed, shall not exceed one hundred fifty percent of such limits.

es

§ 9.

Subdivision 5 of section 2426 of the public authorities law, as amended by chapter 555 of the laws of of 1989, 1989, is amended to read as follows:

5. "Mortgage insurance fund requirement". For any category of loans as of any particular date of computation, an amount of money or cash equivalents equal to the aggregate of (a) such insured amounts of each category of loans as the agency has determined to be due and payable as of such date pursuant to its contracts to insure mortgages plus (b) an amount equal to twenty per centum of the amounts of each category of loans insured under the agency's insurance contracts plus twenty per centum of the amounts to be insured under the agency's commitments to insure less the amounts payable in each category of loans pursuant to clause (a) of this subdivision, provided, however, that if the board of

EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

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