We're the State of New York Mortgage Agency (SONYMA), and under our new Forward Commitment Program, local banks originate mortgages on our behalf and then promptly assign them to us. Does mortgage recording tax apply when those banks record the mortgages, given that our enabling law exempts our 'operations' from taxation?

Plain-English summary

The State of New York Mortgage Agency (SONYMA) was created by the Legislature in 1970 to keep a steady supply of residential mortgage credit flowing during periods when private bank lending dries up -- the preamble to its enabling law ties this directly to unemployment, hardship, and housing-construction slowdowns that follow credit shortages. Originally, SONYMA carried out its mission by buying existing mortgages out of banks' portfolios after the fact. In late 1982, the Legislature expanded SONYMA's powers to add a "Forward Commitment Program": SONYMA now promises IN ADVANCE to purchase mortgages that a local bank is about to originate, and as a condition of the deal, the bank must certify the loan is one it wouldn't otherwise have made. The bank originates and records the mortgage, then promptly assigns it to SONYMA.

SONYMA asked whether mortgage recording tax applies to these Forward Commitment Program mortgages when the local bank records them. Its enabling law, Public Authorities Law § 2412, broadly exempts SONYMA's "property... income and operations" from taxation "of every kind and nature" and specifically waives any "recording fee or transfer tax... on account of instruments recorded by it or on its behalf." Sections 2421-2422 further direct that SONYMA's law controls over any inconsistent statute and must be liberally construed to fulfill its purposes.

The problem: Tax Law § 252 contains a sweeping anti-exemption rule -- no mortgage "shall be exempt... by reason of anything contained in any other statute." Taken at face value, that would override SONYMA's exemption entirely. The Department resolved this direct statutory conflict using a standard interpretive rule: where two enactments addressing the same subject matter conflict, the later, more specific enactment controls over the earlier, more general one (Williamsburgh Power Plant Corp. v. City of New York). Tax Law § 252 traces to 1909 and was last amended in 1966; the SONYMA exemption law was enacted in 1970 and expanded in 1982 -- later AND more specific. So SONYMA's statute prevails, but only to the extent the recording in question actually falls within SONYMA's exempt "operations."

On that question, the Department sided with SONYMA. The Legislature had explicitly declared the Forward Commitment Program an "essential governmental function." Under the program's structure, the local bank doesn't act independently -- it originates the mortgage loan specifically on SONYMA's behalf, pursuant to SONYMA's advance purchase commitment mandated by statute, and functions as SONYMA's agent in recording the instrument that SONYMA will promptly acquire. The recording is the very mechanism that secures SONYMA's financial interest in the transaction. A tax on that recording, the Department reasoned, is functionally a tax on SONYMA's operations -- "even if not paid directly by SONYMA" -- because the mortgage loan and its recording are mandated by, and integral to, the statutory scheme. Accordingly, mortgages arising directly from the Forward Commitment Program are exempt from mortgage recording tax.

What this means for you

Public benefit corporations and state authorities with broad tax-exemption statutes

When your enabling statute's tax exemption conflicts with Tax Law § 252's general anti-exemption rule, the "later and more specific statute controls" doctrine can resolve the conflict in your favor -- but only for activities that genuinely fall within your statutorily-defined "operations," not for tangential dealings. Trace the mortgage's role in your statutory mission carefully.

Banks and lenders participating in agency forward-commitment or purchase-commitment programs

Even though you (the bank) are the one physically recording the mortgage, if you're doing so under a binding advance purchase commitment from a tax-exempt public authority, and the loan is one you certify you wouldn't otherwise have made, the recording can be treated as part of the AGENCY's exempt operations -- worth confirming with counsel before assuming ordinary recording tax rules apply.

Bond counsel and public-finance attorneys

This is an early example of the "governmental instrumentality operations exemption beats Tax Law § 252 when the enabling statute is later and more specific" doctrine that recurs throughout the Mortgage Recording Tax opinions for public authorities (UDC, Port Authority-affiliated entities, IDAs, and others) -- useful as a citable precedent for the general interpretive rule itself.

Common questions

Q: Doesn't Tax Law § 252 block ALL mortgage tax exemptions found in other statutes?
A: On its face, yes -- but where a later, more specific statute (like SONYMA's 1970/1982 enabling law) directly conflicts with that general 1966 rule, standard statutory-construction principles let the later, specific statute control.

Q: Does it matter that the bank, not SONYMA, is the one who records the mortgage and initially appears liable for the tax?
A: No. The Department held that because the bank acts as SONYMA's agent under a mandated advance commitment, and the recording secures SONYMA's own financial interest, the tax would functionally fall on SONYMA's operations either way.

Q: Would this exemption apply to SONYMA mortgages acquired under its OLDER, pre-1982 practice of buying existing mortgages after the fact?
A: This ruling addresses the Forward Commitment Program specifically; its reasoning leans heavily on the advance-commitment/agency structure unique to that program, so it shouldn't be assumed to extend automatically to other SONYMA activities without separate analysis.

Q: Can another public authority rely on this ruling?
A: No. It binds the Department only as to SONYMA and this program's specific facts, though the "later specific statute" interpretive principle it applies is a general doctrine.

Citations and references

Statutes:

• Tax Law § 252 (general anti-exemption provision for mortgage recording tax)
• Public Authorities Law § 2401 (SONYMA's legislative purpose)
• Public Authorities Law §§ 2404(7)(b), 2405-b (Forward Commitment Program authority and mandate)
• Public Authorities Law § 2405(1) (original mortgage-purchase mandate, pre-1982 amendment)
• Public Authorities Law § 2412 (property, income, and operations tax exemption)
• Public Authorities Law §§ 2421, 2422 (SONYMA law controls over inconsistent statutes; liberal construction)

Case law cited:

• Williamsburgh Power Plant Corp. v. City of New York, 255 App. Div. 214, aff'd 280 N.Y. 551 (later specific statute controls over earlier general statute)
• Matter of Queens College Student Services Corporation, State Tax Commission, March 17, 1976 (cited on the "operations" scope question)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mortgage_rec_ao_1984.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mortgage/a84_1m.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-84 (1) M
Mortgage Tax
March 29, 1984

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. M840123B

On January 23, 1984 a Petition for Advisory Opinion was filed by the State of New York
Mortgage Agency, 260 Madison Avenue, New York, New York 10016.
Petitioner inquires as to the applicability of the mortgage taxes imposed under Article 11 of
the Tax Law to the recording of mortgages which are part of SONYMA's Forward Commitment
Program.
The State of New York Mortgage Agency (hereinafter "SONYMA"), was created by the
Legislature in 1970. Its purpose is to "assure a steady flow of production of new housing units during
periods when there is an inadequate supply of credit available for new loans for residential housing."
(Public Authorities Law, § 2401) The preamble to the enabling law also states that there is a shortage
of funds for residential mortgages in the private banking system and that "the drastic reduction in
residential construction starts associated with such shortages have caused a condition of substantial
unemployment and underemployment in the construction industry which results in hardships to many
individuals and families, wastes vital human resources, increases the public assistance burdens of
the state and municipalities, impairs the security of family life, impedes the economic and physical
development of municipalities and adversely affects the welfare and prosperity of all the people of
the state."
Against this economic backdrop, SONYMA was given the following general statutory
mandate:
"(1) The purpose of the agency shall be to purchase mortgages
from banks within the state during periods when there is an
inadequate supply of credit available for new residential mortgage
loans and to require such banks to invest an amount equal to the
proceeds thereof as rapidly as possible in new mortgages on
residential real property for family units within the state." (§2405(1)
of Public Authorities Law prior to amendment by Ch. 915 of Laws of
1982)
In the latter part of 1982, the Legislature enlarged the operations of SONYMA, and it was
additionally empowered to carry out the following activity:
"to . . . acquire, and contract to acquire, forward commitment
mortgages made by banks and to enter into advance commitments to
banks for the purchase of said mortgages " (Public Authorities Law,
§ 2404 (7) (b)).

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

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Mortgage Tax
March 29, 1984

Petitioner states that SONYMA is beginning to carry out its Forward Commitment Program.
In authorizing this program, the Legislature found that: "such activities [of the Forward Commitment
Program] by the agency will alleviate a condition in this state which is contrary to the public health,
safety and general welfare and which has constituted in the past and from time to time in the future
can be expected to constitute a public emergency. It is further found and declared that such purposes
are in all respects for the benefit of the people of the state of New York and the agency shall be
regarded as performing an essential governmental function in carrying out its purposes and in
exercising the powers granted by this title." (Public Authorities Law, § 2405-b(1)).
Prior to the institution of the Forward Commitment Program, SONYMA infused new
mortgage credit into the market by buying existing mortgages from a lending institution's portfolio.
Now, pursuant to the enlarged authorization given to SONYMA whereby it is empowered to contract
to acquire and to acquire forward commitment mortgages, the local lending institution now
originates mortgage loans in consideration for SONYMA's promise to purchase such loans. The
mortgage given to the local lending institution is then promptly assigned, after recordation, to
SONYMA. It is clear that the mortgage loans made by the local lending institution would not be
made without SONYMA's promise, in advance, to promptly purchase such loan since, as a condition
to purchase under this Program, the local lending institution must certify that the mortgage loan is
in addition to mortgages such institution would otherwise have made. (Public Authorities Law, §
2405-b(4)). The local lending institution is, in effect, originating the mortgage loan on behalf of
SONYMA. Furthermore, as a condition precedent to the purchase of a forward commitment
mortgage, the originating lending institution warrants that such mortgage shall have been properly
recorded. (Public Authorities Law, § 2405-b(g)(e)).
With respect to exemption from state taxation of the activities of SONYMA, sections 2412,
2421 and 2422 of the Public Authorities Law provide as follows:
"§ 2412. Property and income
The property of the agency and its income and operations shall be
exempt from taxation or assessments of every kind and nature, other
than assessments for local improvements; nor shall the agency be
required to pay any recording fee or transfer tax of any kind on
account of instruments recorded by it or on its behalf."
"§ 2421. Inconsistent provisions of other laws superseded
Insofar as the provisions of this title are inconsistent with the
provisions of any other law, general, special or local, the provisions
of this title shall be controlling. It is the intent of the legislature that
the provisions of this title relating to mortgage commitments and laws
be construed liberally so as to effectuate the public and governmental
purposes thereof."

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TSB-A-84 (1) M
Mortgage Tax
March 29, 1984

"§ 2422. Construction
This title, being necessary for the welfare of the state and its
inhabitants, shall be liberally construed so as to effectuate its
purposes."
Article 11 of the Tax Law imposes taxes on the recording of mortgages of real property
measured by the principal debt or obligation secured by such mortgage. Section 252 of such article,
applicable to exemptions from the mortgage recording tax, provides that "[N]o mortgage of real
property situated within this state shall be exempt, and no person or corporation owning any debt or
obligation secured by mortgage of real property situated within this state shall be exempt, from the
taxes imposed by this article by reason of anything contained in any other statute..." No specific
provision is made in such section for the operations of SONYMA. An apparent inconsistency thus
exists between the Tax Law and the statute which created SONYMA. Where a conflict exists
between two enactments relating to the same subject matter, the latter specific enactment governs
the earlier general enactment. Williamsburgh Power Plant Corp. v City of New York, 255 App. Div.
214, affd 280 NY 551.
Inasmuch as Section 252 of the Tax Law was enacted in 1909, and last amended in 1966, it
must yield to the exemption provisions contained in the law creating SONYMA, which were enacted
in 1970. Accordingly, if the provisions of the Public Authorities Law exempt from the recording tax
the mortgages created pursuant to the Forward Commitment Program, such exemption provisions
will prevail.
In carrying out its Forward Commitment Program, the Legislature has declared that
SONYMA is performing "an essential governmental function." As part of the overall scheme of the
Program set out by the Legislature, the local lending institution records mortgages which SONYMA
has previously committed itself to purchase, as authorized in § 2405-b of the Public Authorities Law.
Under the first clause of § 2412 of the Public Authorities Law, the operations of SONYMA
are exempt from taxation. The question arises whether the recording of a mortgage on behalf of the
agency is a part of the "operations" of SONYMA. Under SONYMA's Forward Commitment
Program, the local lending institution originates the mortgage loan on behalf of SONYMA, and such
local lending institution acts as an agent of SONYMA in causing the mortgage, which is to be
promptly assigned to SONYMA, to be recorded. The mortgage is the very instrument employed by
the legislative scheme in achieving SONYMA's statutory objective. Its recordation is then the means
to secure SONYMA's financial interest. A tax on the recording would be a tax on the operations of
SONYMA, even if not paid directly by SONYMA, since the mortgage loan and the recording of the
mortgage are mandated by the statute. The recording of the mortgage is directly on behalf of
SONYMA and is a part of its operations with respect to the Forward Commitment Program. Matter
of Queens College Student Services Corporation, State Tax Commission, March 17, 1976.

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Mortgage Tax
March 29, 1984

Accordingly, in view of the statutory exemption given to the operations of SONYMA in
carrying out an essential governmental function, and particularly in light of the liberal construction
which the Legislature directs be accorded to the whole title, it is concluded that the mortgages which
arise directly from the operation of SONYMA's Forward Commitment Program are exempt from the
mortgage recording taxes imposed by Article 11 of the Tax Law.

DATED: March 19, 1984

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.