Relates to powers of the state of New York mortgage agency.
Ayes (56): Addabbo, Avella, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Felder, Flanagan, Gallivan, Gianaris, Gipson, Griffo, Grisanti, Hannon, Kennedy, Klein, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Sampson, Sanders, Savino, Serrano, Seward, Skelos, Squadron, Stavisky, Stewart-Cousins, Tkaczyk, Valesky, Young, Zeldin
Nays (2): Hoylman, Krueger
Excused (3): Golden, Hassell-Thomps, Smith
TITLE OF BILL: An act to amend the public authorities law, in relation to the powers of the state of New York mortgage agency
Purpose of the Bill:
The bill would grant the State of New York Mortgage Agency ("SONYMA" or "Agency") authority to sell its mortgages at private sales.
Summary of Provisions:
Section 1 of the bill would amend Section 2404(9) of the 'Public Authorities Law to remove the limitation on the Agency's authority to sell mortgages at private sales.
Section 2 of the bill provides for an immediate effective date.
SONYMA can only sell mortgages in private sales to an agency of the federal government, the Federal National Mortgage Association or to a bank from which it has purchased loans.
Statement in Support:
The global credit and liquidity crisis severely impacted the way SONYMA funded its programs. The disruption in the short-term debt markets resulted in higher interest rates and shut off access to the capital markets for extended periods of time. SONYMA found itself unable to use the capital markets to issue bonds to fund its programs.
SONYMA's mortgage programs are available to mortgagors throughout New York. Qualifying mortgage loans made to low and moderate income homebuyers are delivered to SONYMA by its participating banks on a weekly basis for purchase by SONYMA, at stated rates of interest. SONYMA funds the loan purchases primarily through issuing tax-exempt bonds in the capital markets. Throughout its history, SONYMA had never been precluded from issuing bonds on a regular basis and when needed to fund bond purchases.
For the first time, during the fall of 2008 and continuing into 2009, SONYMA and other housing bond issuers could not schedule a bond issuance to fund mortgages due to the credit crisis. SONYMA had to use excess available funds, which would normally be used to subsidize programs to acquire its mortgage loans. Only when the federal government stepped in with its New Issue Bond Program (NIBP) (a private placement bond program), was SONYMA able to come to market with bond issues.
The NIBP bond program ended in 2011 and since then, SONYMA has had to limit itself to funding its programs through fixed rate bonds. SONYMA, like other housing bond issuers, depended on issuing a certain
amount of variable rate bonds as part of its bond issues. This device allows it to lower overall costs. An effect of the credit crisis has been to make variable rate bonds initially both more expensive and less available to issuers, primarily due to the dearth of liquidity facility providers. These entities provide back-up for SONYMA in cases where variable rate bonds are tendered by bondholders. As of now, the market is practically nonexistent.
This proposal would allow the Agency to sell its loans to banks or other entities when the Agency is unable to issue bonds, or when bonds are not the best financing option. The mortgages would be sold at par. A number of New York State lenders have expressed interest in purchasing SONYMA loans for their own portfolios
STATE OF NEW YORK ________________________________________________________________________ 7148 IN SENATE May 1, 2014 ___________Introduced by Sen. YOUNG -- (at request of the New York State Homes and Community Renewal) -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Communi- ty Development AN ACT to amend the public authorities law, in relation to the powers of the state of New York mortgage agency THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 9 of section 2404 of the public authorities law, as amended by chapter 1023 of the laws of 1971, is amended to read as follows: (9) Subject to any agreement with bondholders or noteholders, to sell any mortgages or other personal property acquired by the agency at public or private sale and at such price or prices as it shall deter- mine
[, provided, however, that a private sale shall be limited to an agency of the federal government, the federal national mortgage associ- ation, or a sale of a mortgage to a bank from which it was originally purchased]. If the agency determines to sell mortgages at public sale, a notice of such sale shall be published at least once at least five days prior to the date of such sale in a financial newspaper or journal published in the city of New York; S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13820-01-4