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(p) To procure

insurance against any loss in connection with its property and other assets and to procure reinsurance in connection with its obligations, all in such amounts and from such insurers as it deems necessary or desirable;

(9) To consent to the modification, with respect to rate of interest, time of payment of any installment of principal or interest, security or any other term, of any mortgage, mortgage loan, contract or agreement of any kind which the subsidiary corporation has insured or to which the subsidiary corporation is a party;

(1) To sell, at public or private sale, any, mortgage, mortgage participation or other obligation held by the subsidiary corporation; (5) To procure cash equivalents for deposit in its funds;

(t) To enter into co-insurance agreements with any entity authorized by law to provide mortgage insurance with respect to property located within the city of New York, including, but not limited to the state of New York mortgage agency and the United States department of housing and urban development;

(u) To do any and all things necessary or convenient to carry out its purposes and exercise the powers expressly given and granted in

this section.

9. Classification of housing accommodations. The subsidiary corporation may classify housing accommodations within the city and approve any, of such classes as eligible for insurance pursuant to this section and enact separate guidelines dealing with the provision and extent of such insurance.

10. Insurance of mortgage loans. (a) The subsidiary corporation is authorized, subject to the provisions of this section, to make commitments to

insure and to contract to insure mortgage loans eligible for insurance hereunder.

(b). The subsidiary corporation shall limit its insurance on a rehabilitation or preservation loan to an amount not in excess of fifty

per centum, of the outstanding principal indebtedness, provided, however, that the subsidiary corporation may insure an amount not in excess seventy-five per centum of the outstanding principal indebtedness of a rehabilitation loan if it shall find that the extent of rehabilitation is sufficient to justify such additional insurance, provided further, however, that the subsidiary corporation may insure an amount not to exceed the full outstanding principal indebtedness of a rehabilitation or preservation loan when such' mortgage loan has been made by a public benefit corporation of the state of New York which public benefit corporation has issued or will issue bonds or notes, some all of the proceeds of which bonds or notes were used or will be used to make such mortgage loan, or when the mortgage loan has been made by a public ployee pension fund. The foregoing notwithstanding, the sum of the percentage of any mortgage loan insured by the subsidiary corporation and the percentage of such loan insured or to be insured by any other party shall not exceed one hundred per centum of the outstanding principal indebtedness of such mortgage loan.

(c), The subsidiary corporation shall not issue a commitment to insure or a housing insurance contract unless upon the issuance thereof amounts on deposit in the housing insurance fund will at least equal the housing insurance fund requirement.

(d), Except for mortgage insurance contracts and except as otherwise provided in paragraph (e) of this subdivision, the subsidiary corporation shall not issue commitment to insure nor shall it insure any mortgage loan unless it shall first find (i) that the property which is the security for such mortgage loan is located in a neighborhood within the city of New York characterized by a deficiency of available mortgage financing; (ii) that such deficiency has caused or threatens to cause undermaintained and deteriorating housing accommodations and substandard and unsanitary neighborhoods; (iii) that the granting of such mortgage loan will aid in the preservation or rehabilitation of the neighborhood in which such property is located; (iv) that, if the property which is the security for such mortgage loan is other real property, the granting of such

mortgage loan will assist in preventing the deterioration of residential housing in

the neighborhood in which such property, is and (v) that the property which is the security for such loan meets such other requirements as the

subsidiary corporation may from time to time establish by guidelines adopted by the subsidiary corporaEXPLANATION--Matter in italics is new; matter in brackets [ ] is old law

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tion. Any such determination by the subsidiary corporation shall be conclusive and final and shall not be subject to review of any kind or nature or in any manner whatsoever and shall not give rise to

any liability on the part of the subsidiary corporation.

(e) The subsidiary corporation may issue a commitment to insure and may insure any mortgage loans, notwithstanding the criteria set forth in subparagraph (i), (ii), (iii) or (iv) of paragraph (d) of this subdivision provided that it shall find the property which is the security for such

mortgage loan or mortgage loans is either: (i) located within the city of New York in an economic development zone designated pursuant to article eighteen-B of the general municipal law, or (ii) will provide safe, sanitary and affordable housing for persons and families for whom the ordinary operations of private enterprise cannot supply such housing, or (iii) the entity providing the mortgage financing was or is created by local, state or federal legislation and certifies to the sub; sidiary corporation that the housing accommodations or other real property

located within the city of New York and meet the program criteria applicable to such entity. In addition, the subsidiary corporation may enter into any mortgage insurance contract, notwithstanding the critería set forth in subparagraph (i), (ii), (iii) or (iv) of paragraph (d) of this subdivision provided that with respect to such mortgage insurance contract, a commitment to insure shall have been previously issued by the predecessor corporation.

(f) The subsidiary corporation may issue a commitment to insure and may insure an existing mortgage loan, when an application for such mortsage

insurance has been submitted prior to the making of such mortgage Toan, and significant circumstances beyond the reasonable control of the mortgagor and mortgagee necessitate the making of the mortgage loan prior to the issuance of the commitment to insure and when it is determined by the subsidiary corporation that such mortgage loan would not have been made except for the reasonable expectation that the subsidiary corporation would insure the mortgage loan. (8) To

be eligible for insurance under this section, a mortgage loan shall be a preservation loan and/or a rehabilitation loan and (i) bear interest, exclusive of premium charges fixed by the subsidiary corporation, at a rate not in excess of the rate of interest authorized by law and not in excess of a maximum rate of interest established by the subsidiary corporation from time to time. In making its determination of appropriate maximum interest rate, the subsidiary corporation shall take into account the rates of interest prevalent in the mortgage market, current data secondary market yields and discount and/or premium levels; (ii) unless the subsidiary, corporation in its sole discretion shall otherwise determine, provide for substantially equal and constant periodic payments of principal and interest in amounts sufficient to pay all interest and effect full repayment of principal within the term of the mortgage loan; (iii) contain terms with respect to the prepayment, insurance repairs, alterations, payment of taxes, special assessments, service charges, default reserves, delinquency charges, foreclosure proceedings, additional and secondary liens, and such other matters as the subsidiary corporation may in its discretion prescribe; (iv) be companied by certificates, issued by such officers of the mortgagee, independent appraisers or other persons as the subsidiary corporation may require, certifying that: (A) where appropriate, the annual income to be derived from the property equals not less than one hundred five per centum of the annual charges and expenses, including provision

for reserves, satisfactory to the subsidiary corporation, for the amortiza; tion of subordinate mortgage loans over the remaining terms of such mortgage loans regardless of whether the terms of such subordinate mortgage loans include scheduled amortization of principal; (B) the remaining useful life of the property is greater than the tern of the mort: gage; and (C), the housing, accommodation or other real property does not contain any substantial violations of the housing maintenance code, or the multiple dwelling, law, except that in the case of a mortgage loan made to the owner of a housing accommodation or other real property containing any such violations, the subsidiary corporation may insure or commit to insure such mortgage loan if the mortgagee and the owner have submitted a plan, satisfactory to the subsidiary corporation to elimi: nate such violations; and (v) satisfy such additional terms

and conditions as the subsidiary corporation may prescribe.

(h). In addition to the conditions set forth in paragraphs (d) through (8) in this subdivision, the subsidiary corporation shall not insure, nor issue commitment to insure any rehabilitation loan unless it shall

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find (i), that rehabilitation is necessary to upgrade the property, (ii) that rehabilitation will not necessitate more than a minimum amount of relocation of the residents of any housing accommodation and (iii) that the rehabilitation undertaken with the proceeds of the rehabilitation loan has been completed.

(i) A financial institution may request insurance by written application to the subsidiary corporation in such form and manner, together with such information and documents, as the subsidiary corporation may prescribe. No application shall be complete unless and until the financial institution has paid such processing fees and other charges as the subsidiary corporation may impose in connection therewith. The subsidiary corporation shall signify its acceptance of such application for insurance by issuance of commitment to insure

contract insurance.

(j). The subsidiary corporation shall not issue a commitment to insure a mortgage loan extended by the corporation unless such commitment to insure is approved by at least two members of a committee composed of the chairperson of the subsidiary corporation and the members of the subsidiary corporation who are not members of the corporation.

11. Payment of insurance. The subsidiary corporation shall establish procedures to be followed by a mortgagee in the event of a default under the terms of

any mortgage insured by the subsidiary corporation, provided, however, any mod if ication to such procedures (other than

any ambiguity, defect or omission) shall apply only to mortgages for which commitments have been issued after the effective date of such modification. The subsidiary corporation may establish prerequisites for payment of an insurance claim, including, but not limited to, requiring the mortgagee to take such actions with respect to the property securing the defaulted mortgage as may be specified by the subsidiary corporation to be satisfactory evidence of a continuing default, including but not limited to the following actions: (i) becoming lawfully the mortgagee in possession thereof; (ii) causing a receiver to be appointed of such property; (iii) obtaining voluntary conveyance of the mortgagor's right and title' to such property; or (iv) obtaining by foreclosure clear and unencumbered title to such property, all in such manner as the subsidiary corporation may require. Following submission of a valid claim, the subsidiary corporation shall pay an amount which shall not exceed the lesser

of : (A) the then outstanding principal amount of the mortgage multiplied by the per centum of such outstanding amount insured by the subsidiary corporation plus that per centum of the mortgagee's cost arising from the default, inclusive of public liens and delinquent and unpaid interest, all as the subsidiary corporation may from time to time allow, which per centum shall not exceed the per centum of the outstanding principal indebtedness insured by the subsidiary corporation or (B) the insured amount of the mortgage loan at the date of execution of the contract of insurance or its latest amendment, if any, except that the subsidiary corporation shall pay the greater of the two & mounts claims by' a public employee pension fund or by a public benefit corporaţion from mortgage loans financed by the sale of notes or bonds issued by said corporation and such amount payable may, if so provided in the contract of insurance, include accrued interest to the date of redemption for such bonds' or notes and any cost associated with such redemption, provided that no more than the actual loss suffered by such public benefit corporation or public employee pension fund shall be paid. Such payment ma be made by the subsidiary corporation in a lump sum, in partial payments made within such period of time, not in excess of two years, as may be agreed to between the subsidiary corporation

and the mortgagee,

all in accordance with procedures to be established by the subsidiary corporation. The subsidiary corporation shall have the power to bid for and purchase the property securing the defaulted mortgage at any foreclosure or other sale of such property, or to otherwise acquire or take possession of such property in accordance with other provisions of law. In the event of any such purchase, acquisition, taking of possession, the subsidiary corporation shall have the power to complete, administer, sell, dispose of, and otherwise deal with such property, such manner as may be necessary or desirable to protect the interests of the subsidiary corporation.

12. Mortgage insurance fund, housing insurance fund and remic premium reserve fund. (a) The subsidiary corporation shall create and establish EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

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fund to be known as the "mortgage insurance fund" which shall be used as a revolving fund for carrying out the provisions of this section with respect mortgage insurance contracts and shall, upon its creation, pay into such fund moneys made available to the subsidiary corporation from the corporation in an amount equal to the mortgage insurance fund requirement as of such date for the purpose of such fund, and shall thereafter, pay into such fund, upon receipt, (i) such portion of mortgage insurance contract premium payments in

amount equal to the amount necessary to be transferred to the mortgage insurance fund in order that the amount on deposit therein be equal to the mortgage

infund requirement (or such lesser amount as may be available); (ii) such portion of the proceeds received by the subsidiary corporation in connection with the exercise of such subsidiary corporation's rights under any mortgage insurance contract in an amount equal to the amount necessary to be transferred to the mortgage insurance fund in order that the amount on deposit therein be equal to the mortgage insurance fund requirement (or such lesser amount may be available); (iii) any moneys appropriated, paid or otherwise made available by the city or the corporation for the

purpose

of such fund; and (iv) any other moneys which may be made available to the subsidiary corporation for

the purpose of such fund from any other source. All moneys held in the mortgage insurance fund, except hereinafter provided, shall be used, as required, solely for the payment of the subsidiary corporation's liabilities arising from mortgage insurance contracts; provided, however, that moneys in such fund shall not be withdrawn therefrom at any time in such amount as would reduce the amount of such fund to less than the mortgage insurance fund requirement, except for the purposes of paying such liabilities, as the same become due and for

the

payment of which other moneys of the subsidiary corporation are not available. Any income or interest earned by, or increment to, the mortgage insurance fund due to the investment thereof or any amount in excess of the mortgage insurance fund requirement shall be transferred at least annually by the subsidiary corporation to the remic premium reserve fund or, at the written direction of the chairperson, to such other funds accounts of the subsidiary corporation to the extent it does not reduce the amount of the mortgage insurance fund below the mortgage insurance fund requirement.

(b) The subsidiary corporation shall create and establish a fund to be known as the "housing insurance fund" which shall be used as a revolving fund for carrying

the provisions of this section with respect to housing insurance contracts and shall, upon its creation, pay into such fund any moneys cash equivalents made available to the subsidiary, corporation from the corporation for the purpose of such fund, and shall thereafter, pay

into such

fund,

upon receipt, (i) such portion of housing insurance contract premium payments in an amount

equal to the amount necessary to be transferred to the housing insurance fund in order that the amount on deposit therein be equal to the housing insurance fund requirement (or such lesser amount as may be available); (ii) such portion of the proceeds received by the subsidiary corporation in nection

with the exercise of such subsidiary corporation's rights under any housing insurance contract in an amount equal to the amount sary to be transferred to the housing insurance fund in order tñat the amount on deposit therein be equal to the housing

insurance fund requirement (or such lesser amount may be available); (iii) any moneys or cash equivalents appropriated, paid or otherwise made available by the city, the federal government or the corporation for the pur; pose of such fund; and (iv) any other moneys or cash

equivalents which may

be made available to the subsidiary corporation for the purpose of such fund from any other source. All moneys or cash equivalents held in the housing insurance fund, except as hereinafter provided, shall be used, as required, solely for the payment of the subsidiary corporation's liabilities arising from housing insurance contracts; provided, however, that moneys or cash equivalents in such fund shall not be withdrawn therefrom at any time in such amount as would reduce the amount of such fund to less than the housing insurance fund requirement,

except for the purpose of paying such liabilities, as the same become due and for the payment of which other moneys of the subsidiary corporation not available. Any income or interest earned by, or increment to, the housing insurance fund due to the investment thereof or excess of the housing insurance fund requirement shall be transferred at least annually by the subsidiary corporation to the remic premium reserve fund

at the written direction of the chairperson, to such

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other funds or accounts of the subsidiary corporation to the extent it
does not reduce the amount of the housing insurance fund below the
housing insurance fund requirement.

(c) The subsidiary corporation shall create and establish such ac-
counts within the housing insurance fund as may be necessary desir-
able for its corporate purposes.

(d) The subsidiary corporation shall create and establish a fund to be known as the "remic premium reserve fund" for the purpose of providing for payment of the subsidiary corporation's liabilities arising from its operations, its mortgage insurance contracts and its housing insurance contracts and shall, upon its creation, pay into such fund moneys or cash equivalents made available to the subsidiary corporation from the corporation for the purpose of such fund, and shall thereafter, pay into such fund, upon receipt, (i) the balance of the premium payments, if any, received by the subsidiary corporation with respect to mortgage insurance contracts and housing insurance contracts after making the deposits described in subparagraph (1) of paragraph (a) and subparagraph (1) of paragraph (b) respectively, of this subdivision; (ii) the balance of any

proceeds received by the subsidiary corporation in connection with the exercise of such subsidiary corporation's rights under any mortgage insurance contract or housing insurance contract after making the deposits described in subparagraph (ii) of paragraph. (a) and subparagraph (ii) of paragraph (b) respectively of this subdivision; (iii) any moneys or cash equivalents appropriated,

paid

otherwise made
available by the city, the federal government or the corporation for the
purpose of such fund; and (iv) any other moneys

cash equivalents
which may be made available to the subsidiary corporation for the pur-
pose of such fund from any other source.
(e) The subsidiary corporation

shall create and establish such ac-
counts within the renic premium reserve fund as may be necessary for its
corporate purposes.

(f) Except as otherwise provided in this section, all moneys received
by the subsidiary corporation shall be deposited in the remic premium
reserve fund.

(8) If the remic premium reserve fund is funded in whole or in part
with cash, the moneys in such fund shall be deposited in
banks trust companies designated, in manner provided by law, as de-
positories of the funds of the subsidiary corporation. The subsidiary
corporation may invest any moneys in such fund in the same manner as
moneys of the corporation may be invested, provided that

such obliga-
tions shall be payable within such time as the proceeds may be needed to
meet expenditures estimated to be incurred by the subsidiary corpora-
tion. Any interest earned or capital gain realized on the money so de-
posited or invested shall accrue to and become part of such fund. The
separate indentity of such fund shall be maintained whether its assets
consist of cash or investments or both.

(h) The subsidiary corporation shall transfer from the remic premium reserve, fund such moneys as the subsidiary corporation, by its chairperson, shall certify are required for the subsidiary corporation to pay its operating expenses, to pay any liabilities arising from the subsidiary corporation's mortgage insurance contracts and housing insurance contracts, and to restore the mortgage insurance fund and

the housing insurance fund to

the mortgage insurance fund requirement and housing insurance fund requirement, respectively.

(1) The subsidiary corporation shall keep a separate account for the remíc premium reserve fund. Such account shall show (1) the date and amount of each sum paid into the fund, (ii) the interest earned by the fund, (iii) the capital gains or losses resulting from the sale of investments of the fund, (iv) the interest or capital gains which have accrued to the fund, (v) the amount and date of each withdrawal from the fund, and (vi). the

assets

of the fund indicating the cash balance therein and à schedule of the amounts invested. (j). In computing the amount

of the

mortgage insurance fund, the housing insurance fund and the remic premium reserve fund for the

purposes of this section, securities in which all or a portion of such funds shall be invested shall be valued at par, if purchased at par, if purchased at other than par, at amortized value. Amortized value, when used with respect to securities purchased at a premium above discount below par or if purchased at par, or if purchased at other than EXPLANATION—Matter in italics is new; matter in brackets [ ] is old law

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