New York Consolidated Laws, Real Property Law - RPP § 339-ff. Mortgage investments on units by state agencies, insurers, banking organizations and fiduciaries;  limitation to first mortgages

(a) The following persons:  (1) public officers, bodies of the state, municipalities, and municipal subdivisions, (2) persons doing an insurance business (as defined by section one thousand one hundred one of the insurance law), (3) banking organizations (as defined by section two of the banking law), and (4) executors, administrators, trustees, guardians and other fiduciaries, are authorized to invest in bonds, notes and evidences of indebtedness which are secured by first mortgages or deeds of trust upon units and the appurtenant common interests, wherever such persons may invest, and subject to all of the rules and limitations applicable to such investment, in bonds, notes and evidences of indebtedness which are secured by first mortgages or deeds of trust upon real estate.  Where the applicable limitations are dependent upon the type of use of the real estate, only the type of use of the particular unit or units which constitute the security for such investment shall be taken into consideration for the purpose of such limitations.  The existence of any prior lien for taxes, assessments or other similar charges not yet delinquent shall be disregarded in determining whether a mortgage or deed of trust is a first mortgage or deed of trust.

(b) No person enumerated in subdivision (a) of this section may invest in bonds, notes or evidences of indebtedness secured by mortgages or deeds of trust upon units and the appurtenant common interests, which are other than first mortgages or deeds of trust thereupon, notwithstanding any other provision of law (including section three hundred thirty-nine-g of this chapter).

(c) Notwithstanding subdivisions (a) and (b), banking organizations are authorized, subject to the rules and limitations applicable thereto contained in subdivision four-a of section one hundred three, subdivision six-a of section two hundred thirty-five, subdivision four-a of section three hundred eighty and subdivision eight of section four hundred fifty-six of the banking law, and the New York job development authority is authorized to invest in bonds, notes and evidences of indebtedness which are secured by mortgages other than first mortgages upon units and the appurtenant common interests, provided such mortgages are in compliance with title eight of article eight of the public authorities law.

(d) Notwithstanding subdivisions (a) and (b) of this section, the New York state urban development corporation is authorized to invest in bonds, notes and evidences of indebtedness which are secured by mortgages other than first mortgages upon units and the appurtenant common interests, provided that (i) such units are owned or are to be acquired by a corporation as defined in subparagraph five of paragraph (a) of section one hundred two of the not-for-profit corporation law and are to be used for commercial purposes, and such corporation has executed a loan authorization agreement with the New York state urban development corporation on or before June thirtieth, nineteen hundred eighty-eight or (ii) such units are developed as a part of a project of the New York state urban development corporation that received specific authorization in chapter eight hundred thirty-nine of the laws of nineteen hundred eighty-seven;   1  and further provided that such investments and subordinate mortgages are in compliance with chapter one hundred seventy-four of the laws of nineteen hundred sixty-eight   2, as subsequently amended.

(e) Notwithstanding subdivisions (a) and (b) of this section, the New York city housing development corporation and a city having a population of one million or more are authorized to invest in bonds, notes, and evidences of indebtedness which are secured by mortgages other than first mortgages upon dwelling units and the appurtenant common interests provided that such investment is made in connection with a project undertaken pursuant to the private housing finance law or the general municipal law.

(f) Notwithstanding subdivisions (a) and (b) of this section, the division of housing and community renewal and the housing trust fund corporation, their successors and assigns, are authorized to invest in bonds, notes, and evidences of indebtedness which are secured by mortgages other than first mortgages upon dwelling units and the appurtenant common interests provided that such investment is made in connection with a project undertaken pursuant to the private housing finance law.