of the greater number of outstanding mortgage investments that the company is authorized to bring foreclosure actions and in many cases the company is authorized to take title to the properties seld thereunder, but in many cases no provision is made for the conferring upon such companies of adequate trust powers to meet any emergency which may be presented and it is doubtful whether under existing law such adequate power can be conferred.

Orders of the supreme court for the rehabilitation or liquidation of many of the companies, subject to the insurance law or banking law as aforesaid, have been made pursuant to the provisions of the insurance or banking law and both the superintendent of insurance and the superintendent of banks have taken possession, as in such laws provided, of the property of such companies and are administering the bonds and mortgages in respect of which such mortgage investments have been issued and/or guaranteed. The companies in rehabilitation or liquidation sold and/or guaranteed in excess of two-thirds of the aggregate principal amount of all outstanding mortgage investments issued by companies organized under or subject to the provisions of the insurance or banking laws. All of the companies in liquidation or rehabilitation are unable to meet their obligations as they mature. No statutory provisions now exist in aid of liquidation of these companies in furtherance of the former section sixty-three, and the present article eleven of the insurance law, and corresponding provisions of the banking law. The holders of such mortgage investments are asserting a great variety of claims against many of these companies, and also allege that the superintendent of insurance and the superintendent of banks are disqualified to represent them because of the conflict in interest between the companies and such holders.

Many thousands of the mortgages with respect to which these companies have issued mortgage securities are in default either in payment of principal, interest or by reason of failure of the owner to pay taxes. The foreclosure of all of the mortgages in default would ruinously affect owners of real estate generally and the holders of mortgages or other mortgage investments thereon, would aggravate the existing demoralization in real estate values, and inflict irreparable injury not only upon the holders of mortgage investments but upon the people of the state generally. The situation creates an immediate danger to the economic welfare and the vital interest of the community.

The holders of mortgage investments in many thousands of issues are numerous and it has been difficult to obtain concerted action by them. The department of insurance and the banking department are not sufficiently equipped to enable their personnel to efficiently perform their usual duties and properly carry on their normal functions, and, in addition, to perform the burdensome task of representing the holders of mortgage investments of thousands of separate and distinct mortgage issues which require the proper administration of upwards of twenty thousand parcels of real property underlying the same.

Unpaid taxes are accumulating upon many of the properties subject to the mortgages and penalties for nonpayment thereof are accruing in most instances at the rate of ten per centum per annum. The accumulation of unpaid taxes presents a serious problem to the political subdivisions of the state. Many holders of mortgage investments are receiving no income or little income therefrom and they and their families are in want. The present market for such mortgage investments has depreciated to such an extent that few of such mortgage investments can be sold except at great sacrifice and at distress prices.

emergency.

The legislature, therefore, hereby declares the existence of a Declare public emergency affecting the health, safety and comfort of the public people, requiring the enactment of the provisions of this act. Legislation adapted to meet the emergency by conferring power upon a new state agency to act promptly and to encourage, promote and facilitate self-organization by the holders of mortgage investments until such time as there may be established other effective organizations for the administration of their interests is essential to protect the vital interests of the state.

ARTICLE II

CREATION OF MORTGAGE COMMISSION

Section 2. Mortgage commission of the state of New York.

members.

designate.

§ 2. Mortgage commission of the state of New York. An agency, to be known as mortgage commission of the state of New York, hereinafter referred to as the commission, is hereby created. Such commission shall be a body corporate and politic. It shall Three consist of three members who shall be appointed by the governor with the consent of the senate. The governor shall designate one of Governor such members to be the chairman of the commission. The original appointment shall be made so that the term of the chairman shall expire January first, nineteen hundred forty, the term of one member January first, nineteen hundred thirty-nine, and the term of one member January first, nineteen hundred thirty-seven. Their successors shall be appointed for terms which shall expire January first, nineteen hundred forty. Vacancies in the office vacancies. of the commission occurring otherwise than by expiration of term shall also be filled by the governor with the consent of the senate for the unexpired term. The chairman shall receive a salary of Salary. fifteen thousand dollars per year. The other members of the commission shall receive salaries of twelve thousand dollars each per year. Each member of the commission shall be entitled to his expenses actually and necessarily incurred by him in the performance of his duties. Each member of the commission shall devote his entire time to the performance of his duties. The power of the commission shall be vested in and exercised by a majority of the members thereof then in office. The commission may delegate to one or more of its members, or to its officers,

Governor may

remove.

agents or employees, such powers and duties as it may deem proper. The governor may remove any member of the commission for inefficiency, neglect of duty, or misconduct in office, giving him. a copy of the charges against him and an opportunity of being publicly heard in person and/or by counsel in his own defense, upon not less than ten days' notice. If such member shall be removed, the governor shall file in the office of the department of state a complete statement of charges made against such member, and his findings thereon, together with a complete record of the proceedings.

§ 3. Definitions. 1. "Guaranty corporations," as used in this act, shall include title and/or mortgage guaranty corporations organized or operating under the insurance law and all companies organized or operating under the banking law which shall have issued, sold, distributed, guaranteed or otherwise dealt in mortgage investments, as hereinafter defined.

2. "Mortgage investments," as used in this act shall include all interests in bonds, notes and other evidences of indebtedness of individuals, partnerships, associations or corporations secured by a mortgage or mortgages upon real property or deed or deeds of trust or similar evidences of an interest in real property guaranteed by a guaranty corporation and all collateral trust bonds or notes of a guaranty corporation which are secured by pledge or assignment of any such interests, and any property taken in lieu thereof by foreclosure or otherwise, but shall not include any such bond, note or other evidence of indebtedness when the same shall be held entirely by only one person, firm or corporation or any such collateral trust obligations, when all of them having the same security are held entirely by only one person, firm or corporation. 3. "Mortgage," as used in this act shall mean the mortgage or group of mortgages in respect of which mortgage investments have been issued.

*So in original. [Does not conform to subsection heading.]

4. "Bond," as used in this act shall mean the bond or group of bonds in respect of which mortgage investments have been issued.

5. "Holder of a mortgage investment," as used in this act, shall mean the individual, partnership, association or corporation holding, either personally or in a representative capacity, any such mortgage investment.

6. "Assenting holder," as used in this act, shall mean a holder of a mortgage investment who does not file with the clerk of the court a written dissent, duly executed and acknowledged, from a proposal or plan submitted to the court under the provisions of this act, or modification thereof, prior to the return date of the notice provided for in section seven or prior to such other date as may be fixed by the court.

7. "Dissenting holder," as used in this act, shall mean a holder of a mortgage investment who files with the clerk of the court a written dissent, duly executed and acknowledged, from a proposal or plan submitted to the court under the provisions of this act, or modification thereof, prior to the return date of the notice provided for in section seven or prior to such other date as may be fixed by the court.

8. A "plan of reorganization" includes a proposal

(a) to modify or alter the rights of holders of mortgage investments through the change or modification of the terms or provisions of the underlying bonds and/or mortgages, or through the issuance of new bonds, notes, stock or securities of any character;

(b) to transfer or convey or cause to be transferred or conveyed, directly or indirectly, all or any part of the properties, mortgages and other assets in which holders of mortgage investments are interested to any person, firm or corporation, with or without the issuance of bonds, notes, stock or other securities by any such person, firm or corporation for cash or in exchange for mortgage investments or in satisfaction of claims or rights, or for other appropriate considerations.

9. The word "court" means the supreme court of the state of New York.

ARTICLE IV

POWERS AND FUNCTIONS OF COMMISSION

Section 4. General powers.

5. Limited powers.

6. Functions of commission.

§ 4. General powers. The commission shall have power:

1. To sue and be sued.

2. To have a seal and alter the same at pleasure.

3. To acquire, hold and dispose of property of all kinds for its corporate purposes.

So in original. [Does not conform to section heading.]

General

powers.

4. To make by-laws for the management and regulation of its affairs.

5. Subject to the approval of the director of the budget, to use agents, employees and facilities of the state, paying its proper proportion of the compensation or cost, and may use the attorneygeneral as legal adviser.

6. To appoint and remove agents and employees including counsel, attorneys, engineers, architects, appraisers and accountants and to fix their compensation.

7. To make contracts, and to execute all instruments necessary or convenient.

8. With respect. to all bonds, notes or other evidences of indebtedness, mortgages and property referred to in section six hereof, to collect or cause to be collected principal and interest on the bonds, notes or other evidences of indebtedness and mortgages and the rents, income and/or profits of property; to distribute the amount collected after deduction of expenses of collection and such sums as it deems necessary as reserves for taxes, assessments, water rates and interest, amortization and other obligations with repect to funds borrowed, and to enforce by foreclosure or otherwise any covenant of, or right of action arising out of, the bond, note or other evidences of indebtedness or mortgage.

9. To acquire title to or possession of property covered by a mortgage from the mortgagor or owner by voluntary conveyance or transfer, and/or the rents, income and/or profits therefrom by assignment, or by collection thereof.

10. To purchase at foreclosure or other judicial sales property which constitutes the underlying security for any mortgage under the jurisdiction of the commission and to take title thereto for the benefit of all holders of mortgage investments interested in such mortgage; and on such purchase to apply the amount due on the bond and/or mortgage on the purchase price bid.

11. To operate, manage and rehabilitate by alteration, repair or otherwise any and all properties which are the underlying securities for any mortgage under its jurisdiction and/or to appoint an agent or agents to operate, manage or rehabilitate the same, or to lease the same or any part thereof for a period not exceeding five years, upon such terms and conditions as the commission may deem proper.

12. Where any mortgage under the jurisdiction of the commission confers upon the mortgagor the right to have any property released from the lien thereof upon the making of a specified payment, to execute and deliver such release upon receipt of such payment.

13. To support or oppose in whole of in part any plan of reorganization or other plan, proposal or agreement promulgated by any person, firm or corporation.

14. To withdraw any proposal or to abandon any plan, before approval by the court except in the case of a plan proposed under section ten of this act.