STATE OF NEW YORK
________________________________________________________________________
5474--B
2015-2016 Regular Sessions
IN SENATE
May 14, 2015
___________
Introduced by Sens. COMRIE, PERKINS -- read twice and ordered printed,
and when printed to be committed to the Committee on Finance -- recom-
mitted to the Committee on Finance in accordance with Senate Rule 6,
sec. 8 -- committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee -- reported favorably from
said committee and committed to the Committee on Rules -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee
AN ACT to amend the state finance law, in relation to establishing the
community restoration fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Statement of legislative purpose and findings. The legisla-
2 ture finds and declares that New York's mortgage foreclosure crisis
3 continues. Many New Yorkers are still unable to meet their mortgage
4 obligations. There are delays in the foreclosure process, homes are
5 sitting vacant or in a state of ill repair because of drawn out loan
6 modification and foreclosures, neighborhoods with high concentrations of
7 foreclosures are losing value and the owners are losing equity. Fore-
8 closures that were the result of the real estate downturn and great
9 recession will continue to be a problem within the state. The legisla-
10 ture finds that it is necessary to create a statewide program to stabi-
11 lize communities throughout the state by: (i) avoiding foreclosures and
12 ameliorating the effects of the mortgage foreclosure crisis; (ii) elimi-
13 nating blighted properties and vacant lots that bring down community
14 values and create attractive nuisances within communities; (iii) restor-
15 ing property tax income to counties and towns; and (iv) maintaining
16 affordable housing. Accordingly the legislature hereby creates the
17 community restoration fund.
18 § 2. Definitions. As used in this act, the following words and phrases
19 shall have the following meanings:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11044-05-6
S. 5474--B 2
1 1. "Community development financial institution" or "CDFI" means an
2 organization located in this state which has been certified as a commu-
3 nity development financial institution by the federal community develop-
4 ment financial institutions fund, as established pursuant to 12 U.S.C.
5 4701 et seq.
6 2. "Fund manager" means a New York-based Community Development Finan-
7 cial Institution ("CDFI") fund manager.
8 3. "Program manager" means a property holding company that will own
9 and manage the assets purchased through the community restoration fund.
10 § 3. The state finance law is amended by adding a new section 99-z to
11 read as follows:
12 § 99-z. Community restoration fund. 1. There is hereby established in
13 the custody of the state comptroller a special fund to be known as the
14 "community restoration fund".
15 2. The community restoration fund shall consist of moneys deposited
16 therein by the state comptroller from the attorney general of the state
17 obtained through judgments and settlements with lending institutions for
18 subprime and predatory loans, for mortgage servicing and securitiza-
19 tions, claims related to mortgage practices, mortgage backed securities,
20 cases related to mortgage and mortgage securities in the London Inter-
21 bank offered rate and other mortgage foreclosure related cases and from
22 federal, state or local governments and private investors. Nothing
23 contained in this section shall prevent the state from receiving grants,
24 gifts or bequests and depositing them into the accessible electronic
25 information service fund according to law.
26 3. The moneys in the fund shall be used to:
27 (a) purchase mortgage notes on one, two, three and four family homes
28 at discounted rates with the intent of modifying the mortgage to an
29 affordable rate to keep current homeowners in the property; and
30 (b) acquire homes at discounted rates from lenders, and purchase homes
31 at auction or through short sale with the intent to:
32 (i) rent or sell back to homeowners with an affordable loan;
33 (ii) fund local, not-for-profit-development efforts to turn vacant
34 properties into affordable housing;
35 (iii) rehabilitate distressed properties for new owners if the proper-
36 ty was vacant; and/or
37 (iv) demolish homes beyond repair.
38 4. The urban development corporation shall select the fund manager and
39 program manager through the request for proposal process.
40 5. The fund manager shall:
41 (a) be responsible for the receipt, management and expenditure of
42 monies held in the community restoration fund;
43 (b) maintain books and records pertaining to all monies received and
44 disbursed pursuant to this section;
45 (c) receive public, settlement and other funds and use those funds to
46 purchase assets that will be held by the program manager;
47 (d) have the authority to acquire distressed assets and purchase mort-
48 gage notes on one, two, three and/or four family homes, whether current,
49 delinquent and/or in foreclosure, occupied, vacant or abandoned, where
50 purchased:
51 (i) by a fund manager at current appraised values;
52 (ii) through negotiated sales at FHA distressed asset stabilization
53 program sales;
54 (iii) through auctions, short sales, real estate owned properties or
55 properties identified by the not-for-profit organizations on the commu-
56 nity restoration fund council;
S. 5474--B 3
1 (e) have the authority to transfer distressed assets to the program
2 manager;
3 (f) work with the community restoration fund council to develop strat-
4 egies for acquiring distressed assets and to identify opportunities to
5 acquire distressed assets;
6 (g) work with the program manager and the community restoration fund
7 council to identify not-for-profit developers able to implement disposi-
8 tions tailored to local needs, whether sales to new homeowners, use as
9 affordable rental property, or demolition and repurposing for other
10 community uses;
11 (h) make funds directly available to not-for-profit organizations and
12 developers for use to acquire, rehabilitate and/or finance properties
13 directly. These funds would be made available through a request for
14 proposal process conducted by a state agency in consultation with the
15 fund manager;
16 (i) develop a plan to make this a revolving loan fund; and
17 (j) apply for federal or private grant money that becomes available to
18 carry out the purpose of this section.
19 6. The program manager shall:
20 (a) own and manage the distressed assets acquired by the fund manager;
21 (b) have the power to modify mortgage notes on the acquired assets;
22 (c) with the input of the community restoration fund council, develop
23 disposition strategies tailored to the needs and market conditions in
24 the local communities where the distressed assets are located;
25 (d) work with the community restoration fund council to determine
26 optimal outcomes for acquired mortgage notes and properties;
27 (e) have a relationship with a specialty mortgage servicer whose role
28 is to assist with modifications of acquired mortgage notes;
29 (f) work with the fund manager and the community restoration fund
30 council to develop modification criteria;
31 (g) work with loan servicers and housing counselors to assist borrow-
32 ers with applications for loan modifications and refinancing; and
33 (h) work with the fund manager and the community restoration fund
34 council to identify not-for-profit developers able to implement disposi-
35 tions tailored to local needs, whether sales to new homeowners, use as
36 affordable rental property, or demolition and repurposing for other
37 community uses.
38 § 4. Community restoration fund council. 1. There is hereby estab-
39 lished the community restoration fund council consisting of thirty
40 members. The purpose of such council is to serve as an advisory board to
41 both the community restoration fund and the program manager, assist with
42 the identification of opportunities to acquire distressed assets, assist
43 in the development of disposition strategies tailored to meet the needs
44 and market conditions in the local communities where distressed assets
45 are located, work with the program manager to determine optimal outcomes
46 for acquired mortgage notes and properties, work with the fund manager
47 and program manager to determine the loan servicer's modification crite-
48 ria, and work with the fund manager and program manager to identify
49 not-for-profit developers able to implement dispositions tailored to
50 local needs, whether sales to new homeowners, use as affordable rental
51 property, or demolition and repurposing for other community uses.
52 2. The members of the council shall consist of:
53 a. The commissioner of the New York state department of economic
54 development;
55 b. The commissioner of New York state homes and community renewal;
S. 5474--B 4
1 c. Twenty-eight community based, not-for-profit members with two
2 members from each of the regional economic development regions, with the
3 exception of New York city where there will be two community based,
4 not-for-profit members from each borough.
5 3. No member shall receive any compensation for his or her services.
6 § 5. Annual report to the legislature. The urban development corpo-
7 ration shall submit a report to the governor, the speaker of the assem-
8 bly and the temporary president of the senate on or before the first of
9 October, and annually thereafter, describing the use of the community
10 restoration fund pursuant to this act, including asset purchases, loan
11 modifications, home sales, rentals, property rehabilitations and other
12 information provided pursuant to this act, including: the number of
13 assets purchased, number of loans modified, number of properties rented
14 and a description of projects financed or assisted by fund monies; the
15 amount and source of funds leveraged; and such other information as the
16 state agency may deem appropriate.
17 § 6. The urban development corporation is hereby authorized to promul-
18 gate rules and regulations in accordance with the state administrative
19 procedure act that are necessary to fulfill the purposes of this act.
20 Such rules and regulations are to be completed within one hundred eighty
21 days of the effective date of this act.
22 § 7. This act shall take effect immediately.