§ 654-d. Residential mortgage insurance corporation. 1. Definitions. As used in this section, the following words and terms shall have the following meanings unless the context shall indicate another or different meaning or intent:

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(a) "Cash equivalent". A letter of credit, insurance policy, surety, guarantee, indemnity or other security arrangement.

(b) "Financial institution". (i) Any bank, trust company, national bank, state or federal savings bank, state or federal savings and loan association, or state or federal credit union, insurance company, pension fund or retirement system of any corporation, association, any other entity which is owned or controlled by any one or more of the above, provided such bank, trust company, national bank, state or federal savings bank, state or federal savings and loan association, or state or federal credit union, insurance company, pension fund or retirement system of any corporation or association, and, if an entity which is owned by one or more of the above, such entity, is supervised by or responsible to any agency of the federal government, the state, any department thereof or the governing body of any city, town or village of the state, or (ii) any other entity approved by the subsidiary corporation, or (iii) any one or more of the above when lawfully acting as a trustee or otherwise in a fiduciary capacity. The term "financial institution" shall also include the New York state housing finance agency, the New York state medical care facilities finance agency, the state of New York mortgage agency, the New York state urban development corporation, the corporation, the New York city department of housing preservation and development, the community preservation corporation, any governmental agency of the United States which customarily makes, purchases or holds residential mortgages and any person who is approved as a mortgage lender by the federal housing administration for purposes of insurance issued by such administration or licensed by the state of New York as a mortgage banker.

(c) "Housing accommodation". Any existing building, structure, unit thereof (including an owner-occupied unit in a condominium and a lessee-occupied dwelling unit in which the lessee retains a proprietary lease with respect to such dwelling unit and has an allocable ownership interest in a cooperative housing corporation) or unimproved real property, which is used or occupied, or is intended to be used or occupied as the home or residence of one or more persons, a portion of which may also be used for commercial and other community facilities ancillary to such residence provided that, in the case of any housing accommodation consisting of more than six dwelling units, the floor area of above-ground commercial facilities shall not exceed one-quarter of the above-ground floor area of such housing accommodation (inclusive of such commercial facilities).

(d) "Housing insurance contracts". All contracts entered into by the subsidiary corporation to insure mortgages pursuant to this section, but not including (i) any contracts to insure mortgages entered into by the predecessor corporation which are imposed upon and assumed by the subsidiary corporation pursuant to paragraph (d) of subdivision two of this section, or (ii) any contracts to insure mortgages entered into by the subsidiary corporation with respect to which a commitment to insure was issued by the predecessor corporation.

(e) "Housing insurance fund". The housing insurance fund as established pursuant to subdivision twelve of this section.

(f) "Housing insurance fund requirement". As of any particular date of computation, an amount equal to the aggregate of (i) one hundred per centum of the insured amounts due and payable by the subsidiary corporation pursuant to housing insurance contracts, plus (ii) twenty per centum of the insured amounts under housing insurance contracts other than insured amounts which are due and payable pursuant to (i) above, plus (iii) twenty per centum of the amounts to be insured under housing insurance contracts pursuant to the subsidiary corporation's commitments to insure.

(g) "Mortgage". A first mortgage on real property located within the city of New York, securing a preservation loan or a rehabilitation loan, with a term not to exceed forty years, on real estate, held in fee simple or on a leasehold under a lease having a period of years to run at the time a mortgage is insured under this section of at least twenty per centum greater duration than the remaining term of such mortgage; the term "first mortgage" means such first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate under the laws of the state, together with the credit instruments, if any, secured thereby.

(h) "Mortgage insurance contracts". All contracts to insure mortgages entered into by the predecessor corporation that are imposed upon and assumed by the subsidiary corporation pursuant to paragraph (d) of subdivision two of this section and all contracts to insure mortgages entered into by the subsidiary corporation with respect to which a commitment to insure was issued by the predecessor corporation.

(i) "Mortgage insurance fund". The mortgage insurance fund as established pursuant to subdivision twelve of this section.

(j) "Mortgage insurance fund requirement". As of any particular date of computation, an amount equal to the aggregate of (i) one hundred per centum of the insured amounts due and payable by the subsidiary corporation pursuant to mortgage insurance contracts, plus (ii) an amount equal to the greater of (A) seven million five hundred thousand dollars or (B) twenty per centum of the insured amounts under mortgage insurance contracts other than insured amounts which are due and payable under subparagraph (i) of this paragraph, plus (iii) twenty per centum of the amounts to be insured under the predecessor corporation's commitments to insure; provided, however, that notwithstanding the foregoing, at no time shall the mortgage insurance fund requirement exceed the aggregate of (1) insured amounts due and payable by the subsidiary corporation pursuant to mortgage insurance contracts, plus (2) one hundred per centum of the insured amounts under mortgage insurance contracts other than insured amounts which are due and payable under clause (1) of this paragraph, plus (3) one hundred per centum of the amounts to be insured under the predecessor corporation's commitments to insure.

(k) "Mortgagee". The mortgage lender under a mortgage insured by the predecessor corporation or insured pursuant to subdivision ten of this section, and its successors and assigns.

(l) "Mortgage loan". A mortgage loan secured by a mortgage.

(m) "Mortgagor". The original borrower under a mortgage loan insured by the predecessor corporation or insured pursuant to subdivision ten of this section, and its successors and assigns.

(n) "Multi-family housing accommodation". A housing accommodation with five or more dwelling units.

(o) "Operating expenses". All costs of administering the subsidiary corporation, including, but not limited to, salaries and wages, expenses of administering staff functions, fees of professional consultants, legal fees, charges incurred for servicing of mortgage loans, money management fees, office rents, utility charges, costs of supplies, furnishings, equipment, machinery and apparatus, maintenance and repair of property, payment to the corporation for services rendered, amounts due and owing under contracts validly entered into by the predecessor corporation or the subsidiary corporation, other than mortgage insurance contracts and housing insurance contracts, respectively, and other expenses incurred in connection with any of the foregoing.

(p) "Other real property". Any building, structure or unimproved property which is used or occupied, or is intended to be used or occupied, primarily for emergency, transitional or shelter housing, a portion of which may also be used for commercial and other community facilities ancillary to such use provided that, the floor area of above-ground commercial facilities shall not exceed one-quarter of the above-ground floor area of such other real property (inclusive of such commercial facilities).

(q) "Predecessor corporation". The New York city rehabilitation mortgage insurance corporation created by section one of chapter nine hundred twenty-four of the laws of nineteen hundred seventy-three, being, prior to repeal, Article 14 of the private housing finance law.

(r) "Preservation loan". A mortgage loan extended by a financial institution with a term not to exceed forty years for the purposes of refinancing existing indebtedness secured by one or more mortgages on a housing accommodation or other real property located within the city of New York and/or financing the acquisition of a housing accommodation or other real property located within the city of New York and which otherwise complies with the conditions established pursuant to subdivision ten of this section.

(s) "Rehabilitation". Repairs, alterations or improvements of a housing accommodation or other real property designed to raise the housing standards therein or, in the case of other real property, designed to provide needed improvements therein. Rehabilitation shall also include the construction of a housing accommodation or other real property.

(t) "Rehabilitation loan". A mortgage loan extended by a financial institution with a term not to exceed forty years which may include the refinancing of existing indebtedness, if any, secured by one or more mortgages on the housing accommodation or other real property to be rehabilitated, or financing the acquisition of the housing accommodation or other real property to be rehabilitated, which housing accommodation or other real property shall be located within the city of New York and which otherwise complies with the conditions established pursuant to subdivision ten of this section, provided, however, that a sum equal to at least twenty-five percent of the amount of the mortgage loan shall be used for the cost of rehabilitation of, or construction of improvements on, a housing accommodation or other real property.

2. New York city residential mortgage insurance corporation. (a) There is hereby established a public benefit corporation known as the "New York city residential mortgage insurance corporation" as a subsidiary corporation of the corporation. The purpose of such subsidiary corporation shall be to insure mortgage loans in order to promote the preservation of neighborhoods which are blighted, are becoming blighted or may become blighted, to discourage disinvestment and encourage the investment of mortgage capital in such neighborhoods and to provide safe, sanitary and affordable housing accommodations to persons and families for whom the ordinary operations of private enterprise cannot supply such accommodations.

(b) The subsidiary corporation shall be the successor to the predecessor corporation.

(c) All property and rights of the predecessor corporation (other than moneys of the predecessor corporation) are hereby passed to and vested in the subsidiary corporation, subject, however, to all outstanding contracts of insurance, commitments to insure mortgages, and all outstanding obligations of the predecessor corporation. All moneys of the predecessor corporation (including, but not limited to, amounts held in the mortgage insurance fund established pursuant to section seven hundred nine of this chapter, prior to said section being repealed) and all moneys held in the remic premium reserve fund established pursuant to said section seven hundred nine shall be transferred to the city; provided that as a condition to said transfer, a like amount of money shall be transferred from the corporation to the subsidiary corporation to be deposited into the mortgage insurance fund, the housing insurance fund and the remic premium reserve fund (all established pursuant to subdivision twelve of this section) in such amounts as shall be determined by the subsidiary corporation, subject to the provisions of paragraph (a) of subdivision twelve of this section.

(d) All debts, liabilities, obligations, contracts, agreements, and covenants of the predecessor corporation (including, but not limited to, contracts of insurance and commitments to insure mortgages) are hereby imposed upon and shall be assumed by the subsidiary corporation. All persons having claims under any contracts of insurance or commitments to insure mortgages entered into with the predecessor corporation may enforce those claims against the subsidiary corporation in the same manner as they might have against the predecessor corporation, and the rights and remedies of such persons shall not be limited or restricted in any manner by this section. The foregoing notwithstanding, the debts, liabilities, obligations, contracts, agreements and covenants of the predecessor corporation shall not be imposed upon the corporation. All persons having claims under any contracts of insurance or commitments to insure mortgages entered into with the predecessor corporation shall have no right to enforce those claims in any manner against the corporation.

(e) In continuing the functions and carrying out the contracts, obligations and duties of the predecessor corporation, the subsidiary corporation is hereby authorized to act in its own name or in the name of the predecessor corporation as may be convenient or advisable.

(f) All regulations of the predecessor corporation shall continue to be in effect as the regulations of the subsidiary corporation until amended, supplemented or rescinded by the subsidiary corporation in accordance with law.

3. Assistance; privileges. (a) The subsidiary corporation may receive moneys from the corporation, the state, any public benefit corporation, the city, the federal government or any other source for public purposes set forth in this section.

(b) The subsidiary corporation may contract for and accept any gifts or grants or loans of funds or property or financial or other aid in any form from the federal government or any agency or instrumentality thereof, or from the state or any agency or instrumentality thereof, including the city and the corporation, or from any other source, public or private, and to comply, subject to the provisions of this section, with the terms and conditions thereof.

(c) The city and the corporation are each hereby authorized to, but neither is required to, make gifts, grants or loans of funds or property or financial or other aid in any form to the subsidiary corporation and to enter into any contracts or other agreements with the subsidiary corporation, on such terms and conditions as the city or the corporation, as applicable, and the subsidiary corporation may agree upon, all in furtherance of the public purposes set forth in this section.

(d) All domestic corporations or associations organized for the purpose of carrying on business in this state, public benefit corporations, public employee pension funds and any other persons, corporations or associations are hereby authorized to make contributions to the subsidiary corporation.

(e) The subsidiary corporation shall have all the privileges, immunities, tax exemptions and other exemptions of the corporation to the extent the same are not inconsistent with this section.

4. Membership. The membership of such subsidiary corporation shall consist of nine members, seven of whom shall be members of the corporation and two of whom shall be appointed by the mayor. The members who are not members of the corporation shall serve for terms ending two and four years respectively from January first next succeeding the date of their appointment. The successors of the members who are not members of the corporation shall serve for terms of four years each. A member who is not a member of the corporation shall continue in office until his or her successor has been appointed and qualified. With respect to any member who is not a member of the corporation, the mayor shall fill any vacancy which may occur by reason of death, resignation or otherwise for the remaining unexpired term of such member. A member who is not a member of the corporation may be removed by the mayor for cause, but not without an opportunity to be heard in person or by counsel, in such member's defense, upon not less than ten days' notice. The powers of the subsidiary corporation shall be vested in and exercised by no less than five of the members thereof then in office. The subsidiary corporation may delegate to one or more of its members, or its officers, agents and employees, such duties and powers as it may deem proper. The commissioner of the department of housing preservation and development shall serve as chairperson of the subsidiary corporation. The president of the corporation shall serve as president of the subsidiary corporation.

5. Compensation. Notwithstanding any inconsistent provisions of this or any other general, special or local law, no officer or employee of the corporation, the city or the state, or of any public corporation, as defined in the general construction law, shall be deemed to have forfeited or shall forfeit such person's office or employment or any benefits provided under the retirement and social security law or under any public retirement system maintained by the state or by the civil divisions thereof by reason of such person's acceptance of membership on or by virtue of such person's being an officer, employee or agent of the subsidiary corporation. The members may engage in private employment or in a profession or business, unless otherwise prohibited from doing so by virtue of holding another public office, subject to the provisions of Article 18 of the general municipal law. For the purposes of such article eighteen, the subsidiary corporation shall be a "municipality" and a member shall be a "municipal officer". No member of the subsidiary corporation shall receive additional compensation, either direct or indirect, other than reimbursement for actual and necessary expenses incurred in the performance of such person's duties, by reason of such person serving as a member of the subsidiary corporation.

6. Transfer of resources. The city and the corporation shall have the power to, but shall not be obligated to, transfer to the subsidiary corporation such agents, employees and facilities, including any real and/or personal property, in order to carry out the purposes of this section.

7. Termination. The subsidiary corporation and its corporate existence shall continue until terminated by law; provided, however, that no such law shall take effect so long as the subsidiary corporation shall have contracts to insure mortgages (including mortgage insurance contracts and housing insurance contracts), commitments to insure, notes, bonds, or other obligations outstanding, unless adequate provision has been made for the payment thereof. Upon termination of the existence of the subsidiary corporation all of its rights and properties shall pass to and be vested in the corporation.

8. Powers. The subsidiary corporation shall have the power:

(a) To sue and be sued;

(b) To have a seal and alter the same at pleasure;

(c) To make and alter by-laws for its organization;

(d) To adopt, amend or rescind rules and regulations appropriate to carry out its corporate purposes, including rules and regulations governing the use of its property and facilities and to establish such requirements and enter into such agreements to achieve the objectives of this section;

(e) To make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this section;

(f) To acquire, hold and dispose of real and/or personal property for its corporate purposes;

(g) To engage the services of private consultants on a contract basis for rendering professional and technical assistance and advice;

(h) To appoint officers, agents and employees, prescribe their duties and qualifications and fix their compensation;

(i) To invest any funds, or other moneys under its custody and control in the same manner as the corporation;

(j) To establish and levy fees and charges in connection with the processing of applications for mortgage insurance and fix premium charges for mortgage insurance;

(k) To enter into commitments to insure mortgages and contracts of insurance and enter into any additional agreements as the subsidiary corporation deems appropriate to further the objectives of this section;

(l) To fulfill its obligations and enforce its rights under any contract of insurance, or commitment to insure so furnished as provided in this section and such rules and regulations as may be adopted by the subsidiary corporation;

(m) To pay, pursue to final collection, compromise, waive or release any right, title, claim, lien or demand, however acquired, including any equity or right of redemption;

(n) To foreclose any mortgage in default or commence any action to protect or enforce any right conferred upon it by any law, mortgage, contract or other agreement, and to bid for and purchase such property at any foreclosure or at any other sale, or otherwise to acquire or take possession of any such property;

(o) To deal with, hold, administer, manage, rent, repair, insure or sell, lease or otherwise dispose of any property conveyed to or acquired by the subsidiary corporation and to enter into agreements with the state, the city, or any person, firm, entity, partnership or corporation, either public or private, with regard thereto;

(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;

(q) 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;

(r) To sell, at public or private sale, any mortgage, mortgage participation or other obligation held by the subsidiary corporation;

(s) 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 of 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 or 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 employee 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 a 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 located; 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 corporation. 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 empire zone designated pursuant to Article 18-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 subsidiary corporation that the housing accommodations or other real property are 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 criteria 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 mortgage insurance has been submitted prior to the making of such mortgage loan, 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.

(g) 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 on 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 accompanied 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 amortization 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 term of the mortgage; 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 eliminate 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 (g) in this subdivision, the subsidiary corporation shall not insure nor issue a commitment to insure any rehabilitation loan unless it shall 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 a commitment to insure or a contract of 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 modification to such procedures (other than to cure 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 amounts on claims by a public employee pension fund or by a public benefit corporation 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 may be made by the subsidiary corporation in a lump sum, or 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, or taking of possession, the subsidiary corporation shall have the power to complete, administer, sell, dispose of, and otherwise deal with such property, in 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 a 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 to 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 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 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 as 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 as 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 or 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 out the provisions of this section with respect to housing insurance contracts and shall, upon its creation, pay into such fund any 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) 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 connection with the exercise of such subsidiary corporation's rights under any housing insurance contract 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); (iii) any moneys or cash equivalents appropriated, paid or otherwise made available by the city, the federal government or the corporation for the purpose 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 are not available. Any income or interest earned by, or increment to, the housing insurance fund due to the investment thereof or any amount in excess of the housing 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 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 accounts within the housing insurance fund as may be necessary or desirable 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 (i) of paragraph (a) and subparagraph (i) 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 or otherwise made available by the city, the federal government or the corporation for the purpose 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.

(e) The subsidiary corporation shall create and establish such accounts within the remic 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.

(g) If the remic premium reserve fund is funded in whole or in part with cash, the moneys in such fund shall be deposited in one or more banks or trust companies designated, in manner provided by law, as depositories 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 obligations shall be payable within such time as the proceeds may be needed to meet expenditures estimated to be incurred by the subsidiary corporation. Any interest earned or capital gain realized on the money so deposited 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.

(i) The subsidiary corporation shall keep a separate account for the remic premium reserve fund. Such account shall show (i) 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 a 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, or if purchased at other than par, at amortized value. Amortized value, when used with respect to securities purchased at a premium above or a discount below par or if purchased at par, or if purchased at other than par, shall mean the value as of any given date obtained by dividing the total premiums or discount at which such securities were purchased by the number of interest payments remaining to maturity on such securities after such purchase and by multiplying the amount so calculated by the number of interest payment dates having passed since the date of such purchase; and (i) in the case of securities purchased at a premium by deducting the product thus obtained from the purchase price, and (ii) in the case of securities purchased at a discount by adding the product thus obtained to the purchase price.

(k) The subsidiary corporation shall create and establish such other fund or funds as may be necessary or desirable for its corporate purposes.

13. Charges and fees. (a) The subsidiary corporation shall fix a premium charge for its insurance of mortgages pursuant to this section which shall not be less than the minimum amount nor more than the maximum amount that the state of New York mortgage agency is permitted to charge pursuant to applicable provisions of law.

(b) The subsidiary corporation may establish and levy such other charges and fees in connection with applications for mortgage insurance and insurance commitments as it may deem appropriate and necessary.

(c) Such premium charges and other charges shall be payable by the mortgagor in cash in such manner as may be prescribed by the subsidiary corporation.

(d) Such premium charges and other charges and fees shall not be deemed to be interest for the purposes of section 5-501 of the general obligations law.

14. Assistance by the corporation. The corporation is hereby authorized to perform such functions and services in connection with any lawful corporate purpose of the subsidiary corporation as shall be requested by the subsidiary corporation. The subsidiary corporation shall pay to the corporation from any moneys of the subsidiary corporation available for such purposes such amounts as are necessary to pay the corporation for the services rendered by the corporation pursuant to this section.

15. Assistance by the department of housing preservation and development. The commissioner of housing preservation and development and the department of housing preservation and development are hereby authorized to perform such functions and services in connection with any lawful corporate purpose of the subsidiary corporation as shall be requested by the subsidiary corporation. The subsidiary corporation shall pay to the department of housing preservation and development from any moneys of the subsidiary corporation available for such purposes such amounts as are necessary to reimburse the department of housing preservation and development for the services provided pursuant to this section.

16. Annual report. The subsidiary corporation shall submit to the mayor, the comptroller, the director of management and budget and the corporation within ninety days after the end of its fiscal year, a complete and detailed report setting forth: (i) its operations and accomplishments; (ii) its receipts and expenditures during such fiscal year in accordance with the categories or classifications established by the subsidiary corporation for its operating and capital outlay purposes; and (iii) its assets and liabilities at the end of its fiscal year, including a schedule of mortgages which have been insured during such year, the status of the mortgage insurance fund, housing insurance fund and other reserve or special funds established by the subsidiary corporation.

17. Moneys of the subsidiary corporation. (a) All moneys of the subsidiary corporation, except as otherwise authorized or provided in this section, shall be deposited as soon as practicable in a separate account or accounts in banks or trust companies organized under the laws of the state or national banking association, in each case doing business in the city. The moneys in such accounts shall be paid out on checks signed by such officer or employee of the subsidiary corporation as the subsidiary corporation shall authorize. All deposits of such moneys shall, if required by the subsidiary corporation, be secured by obligations of the United States or of the state or of the city of a market value equal at all times to the amount of the deposit and all banks and trust companies are authorized to give such security for such deposits.

(b) The subsidiary corporation shall prescribe a system of accounts.

(c) The comptroller, or the comptroller's legally authorized representative, is hereby authorized and empowered from time to time to examine the books and accounts of the subsidiary corporation including its receipts, disbursements, contracts, reserve funds, sinking funds, investments, and any other matters relating to its financial standing. Such an examination shall be conducted by the comptroller at least once in every five years; the comptroller is authorized, however, to accept from the subsidiary corporation, in lieu of such an examination, an external examination of its books and accounts made at the request of the subsidiary corporation.

(d) The subsidiary corporation shall submit to the mayor, the comptroller and the corporation within thirty days of the receipt thereof by the subsidiary corporation a copy of the report of every external examination of the books and accounts of the subsidiary corporation other than copies of the reports of such examinations made by the comptroller.

18. Rentals. Notwithstanding the provisions of, or any regulation promulgated pursuant to, the emergency housing rent control law, the local emergency housing rent control act or local law enacted pursuant thereto, all dwelling units in a multiple dwelling the rehabilitation of which commenced after July first, nineteen hundred seventy-seven and which is financed by a mortgage loan insured by the subsidiary corporation (including, but not limited to, mortgage loans insured pursuant to mortgage insurance contracts and housing insurance contracts), except for dwelling units occupied by reason of ownership of stock in a cooperative and except for dwelling units that constitute condominiums, shall be subject to the rent stabilization law of nineteen hundred sixty-nine, beginning immediately after initial rents, as established under applicable provisions of this chapter, § 421-a of the real property tax law, § 489 of the real property tax law and/or subparagraph (m) of paragraph one of subdivision g of section 26-405 of the administrative code of the city of New York for such dwelling units to become effective on the basis of such rehabilitation, provided that any occupant in possession of a dwelling unit that first becomes subject to the rent stabilization law of nineteen hundred sixty-nine pursuant to this section shall be offered a two-year lease notwithstanding any contrary provisions of, or regulations adopted pursuant to, such rent stabilization law, at the initial rent established for such dwelling unit and provided further that such dwelling units, other than those dwelling units, the initial rents of which are established under subparagraph (m) of paragraph one of subdivision g of section 26-405 of the administrative code of the city of New York, shall remain subject to the rent stabilization law in accordance with the provisions of this chapter, § 421-a of the real property tax law and/or § 489 of the real property tax law as the case may be. Except to the extent to which dwelling units, which are controlled under other provisions of law, become subject to the rent stabilization law of nineteen hundred sixty-nine pursuant to the preceding sentence, no dwelling unit shall become subject to the rent stabilization law solely by reason of insurance of a mortgage loan by the subsidiary corporation.

19. Employees of the subsidiary corporation. (a) Notwithstanding any inconsistent provisions of this section, the appointment and promotion of all employees of and for the subsidiary corporation shall be made in accordance with the provisions of the civil service law under the jurisdiction of the city civil service commission and the compensation for such employees shall be fixed by the subsidiary corporation.

(b) The city, the corporation and the predecessor corporation shall have the power to provide for the transfer to the subsidiary corporation of agents, employees and facilities of the city, the corporation or the predecessor corporation, as the case may be, to enable the subsidiary corporation to fulfill its corporate purposes. Employees of the city, the corporation or the predecessor corporation to be transferred to the subsidiary corporation pursuant to this § of the subsidiary corporation without further examination, and all such employees who have been appointed to positions in city service in accordance with the provisions of the civil service law under the rules of the city civil service commission shall have the same status with respect thereto in the service of the subsidiary corporation as they had in city service. Employees who are members or beneficiaries of any existing pension or retirement system shall continue to have such rights, privileges, obligations or status with respect to such system or systems as are prescribed by law on the date this section takes effect, and all such employees who have been appointed to positions in city service in accordance with the provisions of the civil service law under the rules of the city civil service commission shall have the same status with respect thereto in the service of the corporation as they had in city service.

20. Subsidiaries; how created. (a) The subsidiary corporation by resolution may direct any of its members, officers or employees to organize a subsidiary of the subsidiary corporation whenever, in the sole discretion of the subsidiary corporation, it has become necessary to acquire one or more housing accommodations or other real property in the case of sale under foreclosure or in lieu of foreclosure and it is beneficial to effectuate the purpose of this chapter for the subsidiary of the subsidiary corporation to hold title to such housing accommodations or other real property.

(b) Each such subsidiary of the subsidiary corporation shall be wholly owned by the subsidiary corporation and shall be organized pursuant to the business corporation law, the not-for-profit corporation law or article two or article eleven of this chapter.

(c) The subsidiary corporation may transfer to any subsidiary of the subsidiary corporation any money, real and/or personal property or may convey to it any housing accommodation or other real property in order to carry out the purposes of this article. Each such subsidiary of the subsidiary corporation shall have all the privileges, immunities, tax exemptions and other exemptions of the subsidiary corporation to the extent the same are not inconsistent with the statute or statutes pursuant to which such subsidiary of the subsidiary corporation was incorporated. Except as may be inconsistent with the provisions of this article, such subsidiary, if organized pursuant to article two or article eleven of this chapter, shall have all the rights and powers granted to housing companies by this chapter and by any other statute pursuant to which such subsidiary of the subsidiary corporation was organized.

(d) No member or officer of the subsidiary corporation shall receive any additional compensation, either direct or indirect, other than reimbursement for actual and necessary expenses incurred in the performance of such person's duties, by reason of such person serving as a member, director, trustee or officer of any subsidiary of the subsidiary corporation.