S t a t e o f N e w Yo r k M o r t g a g e A g e n c y
2013
Financial S tatements
F i s c a l Ye a r
S O N Y M A
State of New York Mortgage Agency
Financial Statements
Fiscal Year Ended October 31, 2013 and 2012
Contents Introductory Section
Responsibility for Financial Reporting ...............................................................................1
Financial Section
Report of Independent Auditors...........................................................................................2 Management’s Discussion and Analysis .............................................................................5 Statements of Net Position .................................................................................................20 Statements of Revenues, Expenses and Change in Net Position .......................................21 Statements of Cash Flows ..................................................................................................22 Notes to Financial Statements ............................................................................................23
Required Supplementary Information
Schedule of Funding Progress ...........................................................................................54
Supplementary Section
Supplemental Schedule I ....................................................................................................55 Supplemental Schedule II ..................................................................................................57 Supplemental Schedule III .................................................................................................59
Government Auditing Standards Section Report of Independent Auditors on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards ................................61
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Report of Independent Auditors
Management and Directors of the Board State of New York Mortgage Agency
New York, New York
Report on the Financial Statements
We have audited the accompanying financial statements of the State of New York Mortgage Agency (the “Agency”), a component unit of the State of New York, as of and for the years ended October 31, 2013 and 2012, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circ*mstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
A member firm of Ernst & Young Global Limited
Ernst & Young LLP 5 Times Square New York, NY 10036-6530
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1401-1193707
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Agency as of October 31, 2013 and 2012, and the changes in its financial position and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
Adoption of GASB Statement No. 65, “Items Previously Reported as Assets and Liabilities”
As discussed in Note 3 to the financial statements, the Agency restated its financial statements as a result of the adoption of Governmental Accounting Standards Board (GASB) Statement No. 65, “Items Previously Reported as Assets and Liabilities” effective November 1, 2011. Our opinion is not modified with respect to this matter.
Required Supplementary Information
U.S. generally accepted accounting principles require that Management’s Discussion and Analysis and schedule of funding progress as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board which considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency’s basic financial statements. The Supplementary Section is presented for purposes of additional analysis and is not a required part of the basic financial statements.
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The Supplementary Section is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States. In our opinion, the Supplementary Section is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The Introductory Section has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and, accordingly, we do not express an opinion or provide any assurance on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we also have issued our report dated January 29, 2014 on our consideration of the Agency’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Agency’s internal control over financial reporting and compliance.
ey January 29, 2014
A member firm of Ernst & Young Global Limited
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STATE OF NEW YORK MORTGAGE AGENCY (A Component Unit of the State of New York) MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ended October 31, 2013 and October 31, 2012
Overview of the Financial Statements The following isanarrativeoverviewof the financialperformanceof theStateofNewYorkMortgageAgency(the“Agency”or”SONYMA”)forthefiscalyearsendedOctober31,2013and2012withselectedcomparative information for the fiscal year ended October 31, 2011. This analysismust be read inconjunctionwiththefinancialstatements.The annual financial statements consist of five parts: (1)management’s discussion and analysis (thissection);(2)thefinancialstatements;(3)thenotestothefinancialstatements;(4)therequiredsupplementaryinformationand(5)thesupplementaryschedulesthatreportprogramsoftheAgencyindividually.TheAgency’sfinancialstatementsarepreparedusingtheaccrualbasisofaccounting inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica(GAAP).Management’s Discussion and Analysis • This section of the Agency’s financial statements,Management’s Discussion and Analysis (the
“MD&A”),presentsanoverviewoftheAgency’sfinancialperformanceduringthefiscalyearendedOctober31,2013comparedwiththefiscalyearendedOctober31,2012andfiscalyearendedOctober31,2011. Itprovidesadiscussionof financialhighlightsandanassessmentofhow theAgency’sfinancialpositionhaschangedfrompastyears.Itidentifiesthefactorsthat,inmanagement’sview,significantlyaffectedtheAgency’soverallfinancialposition.Itmaycontainopinions,assumptionsorconclusionsbytheAgency’smanagementthatshouldnotbeconsideredareplacementfor,andmustbereadinconjunction with,thefinancialstatementsandotherinformationdescribedbelow.
The Financial Statements • The“StatementofNetPosition”providesinformationabouttheliquidityandsolvencyoftheAgency
byindicatingtheassets,deferredoutflows,liabilitiesandnetposition.• The“StatementofRevenues,ExpensesandChangesinNetPosition”accountsforallofthecurrent
year’srevenuesandexpensesinordertomeasurethesuccessoftheAgency’soperationsoverthepastyear.ItcanbeusedtodeterminehowtheAgencyhasfundeditscosts.BypresentingthefinancialperformanceoftheAgency,thechangeinnetpositionissimilartonetprofitorlossforabusiness.
• The “Statement of Cash Flows” is presented on the direct method of reporting. It providesinformationabouttheAgency’scashreceipts,cashpayments,andnetchangesincashresultingfromoperations,investing,andfinancingactivities.Cashcollectionsandpaymentsarepresentedinthisstatementtoarriveatthenetincreasesordecreasesincashforeachyear.
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The Notes to the Financial Statements • Thenotesprovideinformationthatisessentialtounderstandingthefinancialstatements,suchasthe
Agency’saccountingmethodsandpoliciesprovidinginformationaboutthecontentofthefinancialstatements.
• Detailsareincludedofcontractualobligations,futurecommitmentsandcontingenciesoftheAgency.• Informationisgivenregardinganyothereventsordevelopingsituationsthatcouldmateriallyaffect
theAgency’sfinancialposition. Required Supplementary Information (“RSI”)
• TheRSIpresents the information regarding theAgency’sprogress in funding its obligation toprovidepostemploymentbenefitsotherthanpensionstoitsemployees.
Supplementary Information
• PresentationsoftheAgency’sfinancialinformationarelistedbyprogram. Overview of the Agency’s Financial Performance Background TheAgencyisacorporategovernmentalAgency,constitutingapublicbenefitcorporationandacomponentunitoftheStateofNewYork(the“State”).TheAgencyanditscorporateexistenceshallcontinueuntilterminatedbylaw;provided,however, thatnosuch lawshall takeeffectso longas theAgencyhasbonds,notesorotherobligationsoutstanding.TheAgencyhastwoprimarylinesofoperations:SingleFamilyOperationsandMortgageInsuranceFundOperations.Single Family Operations are dedicated to providing affordable mortgage financing to New York State homepurchaserswithlowandmoderateincomes.Itprovidessuchfinancingthroughanetworkofparticipatinglendersforthe purchase of newly constructed and existing homes; homes in need of renovation; permanently affixedmanufacturedhomesandfinancingforcooperativesandcondominiums.MortgageInsuranceFundOperationsarededicatedtoprovidingmortgage insuranceandcreditsupportformulti‐family affordable residentialprojects and special care facilities, aswell asprovidingpool andprimarymortgageinsuranceonsinglefamilymortgagespurchasedbytheAgency.InApril,2009,theAgency’sstatutoryauthoritytopurchaseeducationloanswasupdatedandexpandedinordertopermittheAgencytoworkwiththeNewYorkStateHigherEducationServicesCorporation(“HESC”)indevelopingaprogramtooffereducationloanstoeligiblestudentsattendingcollegesanduniversitiesintheState.Theprogramhasbeenonhiatussincefiscal2012.TherehavenotbeenanyStudentLoanpurchasessinceMay1,2012.
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Mortgage and Financial Markets TheAgencycontinueditsactivitiesinfiscal2013inamarketstillimpactedbythecontinuedrecoveryfromthehousingcollapseandrecentrecession.Whiletheeconomy,bothdomesticandinternationalshowedsignsofimprovement,themunicipalbondmarketexperiencedsignificantvolatility,especiallybetweenJuneandOctoberasinvestorsdepartedin reaction toboth creditand interest rate risk concerns.According toLipperFMI,municipalmutual fundshavereportednearlynon‐stopoutflowssincemid‐March2013resultingininterestratesrisingtohighsnotseensinceearly2011.Atthestartofthefiscalyear,the30yearMunicipalMarketDatawas2.82%,andincreasedto4.04%bytheendofthefiscalyear.Aswasthecaseinpreviousfiscalyears,oneofthelargestfactorsaffectingthesinglefamilyhousingmarkethasbeenthefederalgovernment’sQuantitativeEasing(QE)programs,underwhichthefederalgovernmenthasbeenpurchasing$45billionofTreasurysecuritiesand$40billionofmortgagebondsmonthlysinceSeptember2012.ThesepurchaseshelpedproducetherelativelylowinterestrateenvironmentthattheAgencyoperatedinatthebeginningofthe fiscalyear,but remarks that theFederalReserve could reduce itspurchases in lateMay sentall fixed incomemarketsintoatailspin.Municipalratesjumped100bpsoverthecourseoffourweeksinreactiontotheconcernaboutrisinginterestrates.Compoundinguncertaintyinthemunicipalmarketwereanumberofsignificantcreditnegatives,mostnotablythefinancial deterioration of PuertoRico andDetroit and the pension funding challenges facing a number of statesincludingIllinois.Otherturbulencein2013stemmedfromOctober’s16daygovernmentshutdown,aloomingdebtceilingdeadlineandthepossibilitythattaxreformcouldthreatencurrentmunicipaltax‐exemption.Whilestoriesofthe financialweaknessof theabovemunicipalitiesweigheddown themarket, theyarenot representativeofmostmunicipalissuers.Thesinglefamilyhousingmarketisstartingtoshowsignsofimprovement.Althoughhomeownershipratesaredownfrom their pre‐recession highs, home prices have been increasing inmostmarkets. Existing new home sales areincreasing,andaccordingtoHarvard’sJointCenterforHousingStudies,afterholdingsteadyforthepastfiveyears,householdgrowthisalsoonanupwardtrend.Todate,federalgovernmentmortgagepurchaseshaveaccountedforapproximately64%oftheeligiblemortgagebondissuance.Withoriginationvolumesfalling,analystshavespeculatedthat,unlesstheFedscaledbackitspurchasesofMBS,thefigurecouldapproach90%ofthemarket.TheseQEpurchasesservedtokeepconventionalmortgagerateslow and therefore SONYMA and other housing finance agencies have not enjoyed their typical tax‐exempt rateadvantagevs.conventionalrates.SONYMA’smortgage originations have lagged from our ten year norms in this competitive rate environment.Howeverwehavetakenadvantageofthelowinterestenvironmentandsoughtopportunitiestolowerourborrowingcosts on outstanding bonds through economic refunding transactions. These refunding opportunities generatedsubsidywhichSONYMAusedtoloweritssinglefamilylendingratesbutwiththesteepincreaseinborrowingcostsdescribedabove, few refunding candidates remain. In fiscal2013, theAgency issued$425millionofbonds,witheconomicrefundingbondsrepresentingapproximatelyonethirdofissuance.Despitetheprogrammaticandmarketchallengesdescribedabove,theAgencycontinuedtobenefitfrombroadeningitsgroupofCommunityReinvestmentAct(“CRA”)motivatedbuyerswhoactivelyparticipateintheAgency’sbondsales.ThisinteresthascomplementedretailinvestordemandandhashelpedtheAgencycontinuetoachievestrongpositivereceptionforitsbondofferings.
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Single Family Operations Highlights General Asinprioryearsandasdiscussedabove,continueduncertaintyinthehousingmarketcoupledwithFederalReserve’spolicytokeepinterestrateslowimpactsSONYMA’sabilitytomaintainitstraditionalinterestrateadvantage.Despitethedifficultenvironment,SONYMA’sloanproductionincreasedsignificantlyfromfiscalyear2012.Duringfiscalyear2013,SONYMAassisted1,599 lowandmoderate‐incomehouseholds(746households infiscal2012)bypurchasing$288.2million inmortgages ($124.8million in fiscal2012).Mostof thebond financed loanswerepurchasedunderSONYMA’stwoprimaryprograms:Duringfiscal2013,theLowInterestRateProgramprovidedfinancingto658households(comparedto258householdsinfiscal2012),andtheAchievingtheDreamProgram,whichassistslower‐incomehomebuyers(70%ofareamedianincomeorless),providedfinancingfor755households(comparedto373householdsinfiscal2012).Infiscalyear2013,theAgencypurchased131%moreinmortgagesthanduringthelastfiscalyear($288.2millionin2013comparedto$124.8millionin2012).Oftheloanspurchased,700borrowersreceiveddownpaymentassistancetotaling$4.8millioninfiscal2013,comparedto316borrowers,totaling$1.9millioninfiscal2012.SONYMAcontinuestoprovidefinancingtounderservedpopulationsandcommunities.Asaresult,targetarealendinginfiscalyear2013increasedby47%,loansmadetolow‐incomehouseholdsincreasedby66%,andminoritylendinghasincreased79%.Infiscal2013,37%ofallSONYMAloansweremadetominorities.Duringfiscal2013,SONYMAcontinuedtobetterserveitsborrowersandindustrypartnersby:
• FocusingitseffortsonLow‐IncomeandMinorityHomebuyers:Duringfiscalyear2013,theAgencyfocuseditsmission on providingmortgage loans to those individuals and families forwhom low interest ratemortgagesmakethedifferenceinachievingsustainablehomeownership.ThiswasaccomplishedbytargetingmortgagefinancingactivitiesontheAchievingtheDreamProgram,whichassistslower‐incomehomebuyers(70%ofareamedianincomeorless).Infiscalyear2013,47.8%oftheAgency’smortgageswereoriginatedunderthisprogram.Overall,50%ofthemortgagespurchasedweremadetolow‐incomehomebuyers(80%ofareamedianincomeorless)andalmost15%ofthe1,599loansSONYMApurchasedstatewideweremadetolow‐income,minorityhouseholds.
• LaunchedtheConventionalPlusPrograminNovember2012.ConventionalPluscomplementsSONYMA’sexistingtax‐exemptbondfinancedprogramsandthenewFHAPlusProgramdescribedbelow.Theproducttakesadvantageof certainpricingandunderwritingbenefitsafforded toSONYMAbyFannieMae. ThefeaturesofConventionalPlusareasfollows:
Noloanlevelpriceadjustments; Lowermortgageinsurancecoveragerequirementsthanstandardloans; TheavailabilityofmortgageinsuranceprovidedbyGenworthMortgageInsurance(orSONYMA’sMIF,
intheeventthatGenworthisunwillingtoinsuretheloan);and Downpaymentand/orclosingcostassistanceupto3%ofthehomepurchaseprice[SONYMAwillallow
itsDownPaymentAssistanceLoantobeusedtopayaone‐timeupfrontmortgageinsurancepremium,thus eliminating themonthlymortgage insurance premium and significantly lowering themonthlypayment].
Theproductisavailableforhomepurchasesandforlimitedcash‐outrefinances.(MCCsarenotavailableforrefinances.)
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• InDecember 2013, SONYMA launched the FHA PlusProgram to complement SONYMA’s existing tax‐
exempt bond financed programs and theConventional Plus Program described above. FHA Plus takesadvantage of a special exemption fromHUD that enables state housing finance agencies to offerdownpaymentassistanceonFHA‐insuredmortgages,wherethedownpaymentassistancemaybeusedtowardstheborrower’sminimumcashinvestment.ThebenefitsofFHAPlusare:
Eligibleborrowersdonothavetobefirst‐timehomebuyers; Noincomeorpurchasepricelimits;and AvailabilityofSONYMAdownpaymentassistance:
o forpurchasetransactions,upto3%ofthehomepurchaseprice.o forrefinancetransactions,upto3%oftheloweroftheunpaidprincipalbalanceortheappraisedvalue.(Theassistancemaybeusedasacreditagainstclosingcostsandprepaids.)
• Completionof thedevelopmentof theSONYMAExpress automated system thatwillassistparticipating
lenders by providing expedited decisions on SONYMA loan eligibility. The system is expected to: (a)streamline theAgency’s loan originationprocess anddramatically reduce the time it takesparticipatinglenderstooriginateSONYMAloans;(b)eliminateuncertaintyofaborrower’seligibilityearlyinthemortgageapplication process; (c) lower overall lender costs; and (d) provide lenderswith the capacity to submitelectronicloanfilestotheAgency,thuseliminatingtheneedtosubmitpaperfiles.Thesystemisexpectedtobe launched in the first quarter of 2014 andwill improve SONYMA’s relationshipswith lenders, otherindustrypartnersandpotentialborrowers.Ultimately,thesystemisexpectedtoincreaseloanproductionandimproveprofitability.
• Continue toworkwith SONYMA’sAdvisoryCouncil to get input and recommendations from industryprofessionals tohelpSONYMAmaximize its roleasan importantproviderofaffordableandsustainablemortgagestolow‐andmoderate‐incomefirst‐timehomebuyersacrossNewYorkState.TheAgencyheldtwomeetingswiththeAdvisoryCouncilinfiscal2013.
• ContinuedOutreach to IndustryPartners:SONYMA continues to cultivate its relationshipwith industry
partnersbyparticipatinginmanyeventswithrealtors,lenders,not‐forprofits,communitygroupsandothers.Thepartnershipshavedeepenedrelationshipswithourpartnersinthehousingcommunityandhavegivenusadditionalopportunitiestopromoteourproducts.
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ThefollowingtablecomparesSONYMA’sloanpurchases(basedondollarspurchased)byfiscalyearandprogram:(Inmillions)
ThefollowingtablecomparesSONYMA’sloanpurchases(basedonnumberofloanspurchased)byfiscalyearandprogram:
$‐
$20
$40
$60
$80
$100
$120
$140
$160
2011 2012 2013
LowInterestRate
AchievingtheDream
ConstructionIncentive
Others
100
200
300
400
500
600
700
800
900
2011 2012 2013
LowInterestRate
AchievingtheDream
ConstructionIncentive
Others
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PerformanceofMortgagePortfolioDespite the continued turbulent economy and real estatemarket, SONYMA’smortgage portfolio has performedconsistentlywell. At theendof fiscal2013,SONYMA’s60daysormoredelinquencieswere4.48% (basedon thenumberofloans).ThiscomparesveryfavorablytotheNewYorkStateandnationalaveragesof10.43%and6.78%,respectively.Asoftheendoffiscalyear2012,thepercentageof60daysormoredelinquencieswas3.80%. TheincreaseinSONYMA’sdelinquencypercentageisprimarilyduetothesignificantincreasesintheelapsedtimetocompleteaforeclosureproceeding.WithrespecttomortgageloansforeclosedbetweenJanuary1,2013andOctober31, 2013, an average of 993days elapsedbetween thedate ofdefault and thedate foreclosureproceedingswerecompleted.Incontrast,withrespecttoAgencymortgageloansforeclosedin2009,2010,2011and2012,anaverageof,respectively,488days,655days,800and959dayselapsedbetweensuchdates.SomeofthesedelayswerecausedbycertainservicerswhowerenotcomplyingwithSONYMA’sservicingguidelines.Assuch,SONYMA tooksteps infiscalyear2013totransfertheportfolioofamajorservicertoitsmasterservicer,M&TBank.Further,anothermajorservicer’sportfoliowillbemovedtoM&TBankin2014. Mortgage Insurance Fund Operations TheMortgageInsuranceFund(the“MIF”)hastwolinesofbusiness.Itprovidesinsuranceonmortgagesformulti‐familyhousingandspecialneedsfacilitiesandonothermortgageloansmadebygovernmententitiesandcommerciallenders.ItalsoprovidesbothpoolandprimaryinsuranceonsinglefamilymortgagespurchasedbySONYMA.ThefollowinggraphhighlightstheMIF’sprojectinsurancecommitmentsforthefiscalyearsindicated.
ThesubstantialincreaseinthenumbersofunitsinwhichmortgageswillinsuredbytheMIFduringfiscal2013wasduetoasingle$55milliontransactionwithWellsFargoBankfortherehabilitationof15,372unitsinCo‐opCityintheBronx.Substantiallyallof theMIF’s revenuesarederived fromaNewYorkStatemortgage recording surtaxwhichhaddeclinedpriorto2011butincreasedinfiscal2013comparedtofiscal2012asindicatedinthefollowingchart:
22,713
$447 million
8,170
$418million
21,194
$417million
Units and Loan Amount
Units
Loan Amount
2012 20132011
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TheincreaseinNewYorkStateMortgageRecordingSurtaxReceiptsfromfiscal2012tofiscal2013isduetoanincreaseinrealestatetransactionsintheState,particularlyincommercialrealestatetransactionsinNewYorkCity,resultinginanincreaseinmortgagerecordings.TheMIFalsoreceived$20.8millionininsurancerecoveries,applicationandinsurancepremiumsduringfiscal2013ascomparedwith$16.7millionduringfiscal2012and$16.4millionduringfiscal2011.InterestearnedbytheMIFduringfiscalyears2013,2012and2011was$14.8million,$21.8millionand$30.4million,respectively.Theclaims‐payingabilityoftheProjectPoolInsuranceAccountandtheSingleFamilyPoolInsuranceAccountoftheMIFarerated“AA‐”and“AA+“,respectivelybyFitchInc.(“Fitch”). FitchaffirmeditsratingontheSingleFamilyPool InsuranceAccountwithastableoutlookand theProjectPool InsuranceAccount,withanegativeoutlookonAugust6,2013.OnJuly18,2011,Moody’saffirmedthe“Aa1”ratingontheProjectPoolInsuranceAccountwithastableoutlook.OnOctober8,2011,Moody’saffirmed its“Aa1” ratingon theSingleFamilyPool InsuranceAccountandchanged itsoutlookfromstabletonegative.
$92.5 million
$134.1million
$79.9 million
New York State Mortgage RecordingSurtax Receipts
2012 20132011
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Higher Education Finance Authority Operations TheNewYorkHigher Education Loan Program (“NYHELPs Program” or “Program”), currently on hiatus, is aprogramunderwhichfixedratecreditbasededucationloansaremadeavailableforeligibleNewYorkStateborrowersattendingparticipatingcollegesanduniversitiesacross theState. TheNewYorkStateHigherEducationServicesCorporation(“HESC”),aneducationalcorporationoftheState,administerstheProgram,actsastheServicerfortheProgramandisresponsibleforsuchthingsascreditunderwriting,marketingtheProgramtoprospectiveborrowersandremedyingdefaults.HESCengagedFirstmark,asubsidiaryofNelnet,Inc.,toperformcertainotherservicingandreportingfunctions.SONYMA,doingbusinessasTheStateofNewYorkHigherEducationFinanceAuthority (“HEFA”) finances theProgram.SONYMA:(1)issuesbondsbasedondemandestimatesprovidedbyHESCand(2)controlsandmanagesthevariousaccountsandfundsheldbothinsideandoutsideofthebondindenture.OnDecember15,2009,HEFAissuedits2009SeriesABonds(the“Bonds”)intheamountof$97.8milliontofinancetheNYHELPsProgram.Duetolowerthanexpecteddemandforloansanduponsatisfactionofcertainratingagencyconditions,onApril26,2010theinitialoriginationperiodwasextendedfromApril28,2010toMarch1,2011.Inordertosatisfyratingagencyrequirementsfortheextension,anadditional$4millionwasmadeavailablethroughastateappropriation,andwasdepositedintotheCapitalizedInterestAccount.HESCadvisedSONYMAinFebruary2011thatdemandfortheloansundertheProgramcontinuedtobesubstantiallylessthananticipated,and informedtheAgencythat,asaresult,theavailableproceedsfromtheBondissuewouldexceedtheamountnecessaryforfundingtheloans.HESCproposedthattheoriginationperiodbeextendedagain.Inorder to extend the origination periodwithout additional funds from the State and to satisfy a rating agencyrequirement,$75,010,000paramountoftheoriginalBondissuewereredeemedonApril15,2011.Afterthebondredemption,theamountof$16.4millionwasleftintheLoanAccount,which,inordertomaintainthebondratings,wererequiredtohavebeenoriginatedbyMay1,2012.ThefundsleftintheLoanAccountafterMay1,2012wereusedtoredeemadditionalBondsonAugust1,2012intheparamountof$7,655,000.BondspayableasofOctober31,2013andOctober31,2012were$13.3millionand$13.7million,respectively.StudentLoansreceivableasofOctober31,2013andOctober21,2012were$11.7millionand$12.6million,respectively.
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Condensed Financial Information STATE OF NEW YORK MORTGAGE AGENCY Net Position Summary Schedules
October31, %Change 2013‐ 2012‐ 2013 2012* 2011* 2012 2011 (inthousands) Assets Cash $ 8,638 $ 18,422 $ 11,073 (53%) 66% Investments 2,256,146 2,288,101 2,191,326 (1%) 4% MortgageandStudentloans receivable 2,873,878 2,964,418 3,214,929 (3%) (8%) Otherassets 36,912 33,325 33,018 11% 1%Totalassets 5,175,574 5,304,266 5,450,346 Deferredoutflowsofresources Accumulateddecreaseinfair valueofhedgingderivatives 38,979 58,292 60,533 (33%) (4%) Deferredlossonrefunding 6,118 7,412 — (17%) 100%Totaldeferredoutflowsofresources 45,097 65,704 60,533 Liabilities Bondspayable 2,828,022 3,037,596 3,213,228 (7%) (5%) Derivativeinstruments‐interest rateswaps 45,679 64,992 60,533 (30%) 7% Interestpayable 7,374 8,374 11,169 (12%) (25%) Allowanceforanticipatedclaims 22,653 33,204 37,584 (32%) (12%) Unearnedincome,accounts payableandotherliabilities 153,087 30,113 21,235 408% 42% Postemploymentretirement benefits 39,000 34,656 30,375 13% 14%Totalliabilities 3,095,815 3,208,935 3,374,124 Netposition $ 2,124,856 $ 2,161,035 $ 2,136,755
*RestatedforGASB65implementation‐pleaseseenote3
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Assets Investments InvestmentsheldbytheAgencydecreasedslightlyfrom$2.29billionatOctober31,2012to$2.26billionatOctober31,2013,adecreaseofapproximately$32millionor1%.ThedecreasewasprimarilyasaresultoftransfersfromtheMIFtotheStateanditsAgenciesintheamountof$32.5million.Thiscompareswithanincreasefrom$2.19billionatOctober31,2011to$2.29billionatOctober31,2012,anincreaseofapproximately$97millionor4%.Theincreasewasprimarilyduetothereceiptofmortgageprepaymentsinexcessofmortgagepurchasesbyapproximately$150million.Mortgage and Student Loans Receivable MortgageandstudentloansreceivablearetheprimaryassetsoftheAgency’sSingleFamilyoperationconstituting56%ofthetotalassetsatOctober31,2013andOctober31,2012and59%atOctober31,2011.Mortgageandstudentloansreceivabledecreasedfrom$2.96billionatOctober31,2012to$2.87billionatOctober31,2013,adecreaseofapproximately$90millionor3%.Thiscompareswithadecreasefrom$3.21billionatOctober31,2011to$2.96billionatOctober31,2012,adecreaseofapproximately$250millionor8%.Thedecreasesineachyearwereduetomortgageprincipalreceiptsexceedingmortgagepurchases. Other Assets OtherassetsareprimarilycomprisedofOwnedRealEstateheldby theAgency.Otherassets increased from$33.3millionatOctober31,2012to$36.9millionatOctober31,2013,anincreaseof$3.6millionor11%.Thiscompareswithanincreasefrom$33.0millionatOctober31,2011to$33.3atOctober31,2012,anincreasesof$300thousandor1%.Theincreaseineachfiscalyearresultfromincreasesinthenumberofloansbeingmovedfromtheloanportfoliotoownedrealestatestatus. Liabilities Bonds Payable At approximately 91% of total liabilities in fiscal 2013 (95% in fiscal 2012), bonds payable comprised the largestcomponentofliabilitiesasofOctober31,2013and2012.Fundsgeneratedbythesaleofbondsareusedtopurchasemortgageloansortoeconomicallyrefundbondsoutstanding.Thepaymentsreceivedonmortgageloans,togetherwithinterestearningsthereon,arethesourceoffundsusedfordebtservicepaymentsdueonbondspayable.Bondspayabledecreasedfrom$3.04billionatOctober31,2012,to$2.83billionatOctober31,2013,adeclineof$210millionor7%.Thiscompareswithadecreasefrom$3.21billionatOctober31,2011to$3.04billionatOctober31,2012,adeclineof$176millionor5%.Thedeclineinbondsoutstandingduringfiscalyear2013and2012wasprimarilyaresultofprincipalpaymentsonbondsexceedingbondissuancesandcontinuedeconomicrefundingissues. Allowance for Anticipated Claims Allowance for anticipated claims decreasedfrom$33.2millionatOctober31,2012to$22.7millionatOctober31,2013,adeclineof$10.5millionor32%,ascomparedtoadeclinefrom$37.6millionatOctober31,2011to$33.2atOctober31,2012,adeclineof$4.4millionor12%.TheMIFestablishesprovisionsforpotentialinsuranceclaimsonitspoliciesthatarenon‐performing.Thebalancefluctuatesasprojectsaremovedtoandfromperformingstatusorasperiodicclaimsarepaid.Duringfiscal2013,2012and2011theMIFmadeclaimpaymentsintheamountsof$11.2million,$11.5millionand$12.5millionrespectively.
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Unearned Income, Accounts Payable and Other Liabilities UnearnedIncome,AccountsPayableandOtherLiabilitiesincreasedfrom$30.1millionatOctober31,2012to$153.1millionatOctober31,2013,anincreaseof$123millionor408%.TheincreaseisprimarilyaresultofthecommitmentbytheMIFtotransferanadditional$103.5milliontotheStateanditsAgenciesinfiscal2014combinedwithasurplusofsurtaxreceiptsintheamountof$22.4million.Thiscomparestoanincreasefrom$21.2millionatOctober31,2011to$30.1millionatOctober31,2012,anincreaseof$8.9millionor42%,whichwasprimarilyduetoanincreaseof$2.5millioninunearnedincomeonmortgagesandanincreaseinexcesstaxreceiptsof$5.3million. Postemployment Retirement Benefits TheAgencyprovidescertaingrouphealthcarebenefitstoeligibleretirees(andforeligibledependentsandsurvivorsofsuchretirees).Thebalanceinpostemploymentretirementbenefitsrepresenttheaccumulatedunfundedactuarialliabilityrequiredtopaythecosttoretirees.Theaccumulatedamountofpostemploymentretirementbenefitsincreasedfrom$34.7millioninfiscal2012to$39.0millioninfiscal2013,anincreaseof$4.3million,orapproximately13%.Thiscompareswithanincreasefrom$30.4millioninfiscal2011to$34.7millioninfiscal2012,anincreaseof$4.3million,orapproximately14%.Theincreasesinfiscal2013and2012of13%and14%,respectively,wereprimarilyduetothereductioninthediscountrateusedintheactuarialcalculation,whencomparedto2011,from4%to3.5%.Thevaluationinfiscal2013and2012werealsoimpactedbytheanticipationofincreasedcostsrelatedtothepassageoftheNationalHealthCareReformAct(seenote10). DerivativeInstruments‐InterestRateSwapsTheAgencyhasenteredintovariousderivativeinstrumentscontracts(“interestrateswaps”)inordertomanagerisksassociatedwithinterestonitsbondportfolio.TheAgencyrecognizesthefairvalueofallderivativeinstrumentsaseitheranassetorliabilityonitsstatementsofnetpositionwiththeoffsettinggainsorlossesrecognizedinearningsoraseitherdeferredinflowsoroutflowsifdeemedaneffectivehedge(seenote10).Forfiscal2013,2012and2011,alloftheAgency’sinterestrateswapsweredeterminedtobeeffectivehedges.Therefore,theAgencyrecordedtheamountofthefairvaluesoftheseinterestrateswapsalongwithacorrespondingdeferredoutfloworinflowofresources.Duetoanincreaseininterestratesrelatingtointerestswaps,themarketvaluesoftheinterestrateswapsdeclinedfromapproximately($65)millioninfiscal2012to($45.7)millioninfiscal2013,adecreaseof$19.3million,or30%.Duringfiscal2012,therewasadecline inmarketvaluefromapproximately($60.5)million infiscal2011to($65)million infiscal2012,adeclineof$4.5million,or7%.
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STATE OF NEW YORK MORTGAGE AGENCY Summary of Revenues, Expenses and Changes in Net Position
FiscalYearEnded October31, %Change 2013‐ 2012‐ 2013 2012* 2011* 2012 2011 (inthousands) OperatingRevenues Interestonmortgages $ 147,635 $ 162,551 $ 172,999 (9%) (6%) Recoveries 11,185 10,546 6,184 6% 71% InvestmentIncome 21,813 30,548 38,081 (29%) (20%) Netchangeinfairmarketvalue
ofinvestments (28,774) (7,380) (6,536) 290% 13% Otheroperatingrevenues 14,822 13,722 13,209 8% 4%Totaloperatingrevenues 166,681 209,987 223,937 OperatingExpenses Interestexpenseandamortization ofdiscountondebt 106,758 124,918 142,360 (15%) (12%) Provisionforestimatedclaims 6,181 8,628 11,530 (28%) (25%) Poolinsurance 508 1,031 949 (51%) 9% Expendituresrelatedtofederal grants 909 828 951 10% (13%) Otheroperatingexpenses 42,729 38,386 35,686 11% 8%Totaloperatingexpenses 157,085 173,791 191,476 Netoperatingrevenue 9,596 36,196 32,461 (73%) 12% Non‐operatingrevenues(expenses)
Mortgageinsurancereservesretained 89,268 87,256 79,722 2% 9%
Federalgrants 909 828 951 10% (13%) TransferstoNewYorkStateandits
Agencies (135,952) (100,000) — 36% N/ATotalnon‐operating(expenses)revenues (45,775) (11,916) 80,673 (Decrease)Increaseinnetposition (36,179) 24,280 113,134 Totalnetposition‐beginningof fiscalyear 2,161,035 2,136,755 2,023,621 Totalnetposition‐endoffiscalyear $ 2,124,856 $ 2,161,035 $ 2,136,755
*RestatedforGASB65implementation‐pleaseseenote3 ʺ—ʺIndicatesapercentagelessthan1%.
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Operating Revenues Interest on Mortgages Interestonmortgage loans fromSingleFamilyoperations represent theprimary sourceof fundsavailable for theAgencytopayinterestdueonbondspayable.Interestonmortgageloansdeclinedfrom$162.6millioninfiscal2012to$147.6millioninfiscal2013,adecreaseof$15.0millionor9%.Thiscompareswithadeclinefrom$173.0millioninfiscal2011to$162.6millioninfiscal2012,adecreaseof$10.4millionor6%.Thecontinueddeclineinfiscalyears2013,2012and2011wasaresultofhistoriclowinterestratesonnewloanspurchasedbytheAgency.Recoveries Recoveries result from the reclassification of certain loans insured by theMIF from non‐performing status toperforming status. Recoveries also include paymentsmade to theMIF after a final claim paymentwasmade.Recoveries increased from $10.5million in fiscal year 2012 to $11.2million in fiscal year 2013, an increase ofapproximately$639 thousand,or6%,ascomparedwithan increased from$6.2million in fiscalyear2011 to$10.5millioninfiscalyear2012,anincreaseofapproximately$4.3million,or71%.Duringfiscal2013,theAgencyreceived$7.1millionincashrecoveries($4.0millioninfiscal2012and$4.7millioninfiscal2011)andhad$9.2millioninnon‐cashadjustments($6.5millioninfiscal2012and$1.5millioninfiscal2011)whichincludesfourprojectsthatwerere‐classifiedfromnon‐performingtoperformingstatustotaling$5.1million.Duringfiscal2013,2012and2011theMIFrecordedrecoveriesofapproximately$3.3millionannuallyrelatingtoanUlsterCountyIDAmortgageonanursinghomeinKingston,NewYork.ThemortgagewasassignedtotheAgencyasaresultofafinalclaimpaidbytheMIFinJuly,2003.Investment Income and Net Change in Fair Value of Investments During fiscal 2013, theAgency realized $21.8million in net earnings on investments frommaturities, sales andinvestments amortization (this compares with $30.5 million and $38.1 million for fiscal years 2012 and 2011,respectively).The calculationof realizedgains and losses is independent of the calculationof thenet increase ordecreaseinthefairvalueofinvestments.Realizedgainsandlossesoninvestmentsthathadbeenheldinmorethanonefiscalyearandsoldinthecurrentfiscalyearmayhavebeenrecognizedasanincreaseordecreaseinthefairvalueofinvestmentsreportedinprioryears.TheAgencyhadrecordedmarktomarketincreasesof$7.8million,$36.6millionand$44million, for fiscalyears2013,2012and2011, respectively.Thenetchange in the fairvalueof investmentsdecreased$28.8millionduring2013(thiscompareswithdecreasesof$7.4millionand$6.5millionforfiscalyears2012and2011,respectively).Theseamountstakesintoaccountallchangesinfairvalue(includingpurchases,maturitiesandsales)thatoccurredduringtheyear.
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Expenses Interest Expense Interestexpensedecreasedfrom$124.9millioninfiscal2012to$106.8millioninfiscal2013,adecreaseofapproximately$18.1millionor15%.Thiscompareswithadecreasedfrom$142.4millioninfiscal2011to$124.9millioninfiscal2012,adecreaseofapproximately$17.5millionor12%.Thedecreasewasduetoadecreaseinbondsoutstanding. Provision for Estimated Claims TheMIFsetsasideprovisionsforpotentialinsuranceclaimsontheMIFinsuredmulti‐familyprojectsandthespecialneedsfacilitiesthatarenon‐performing.Thisaccountfluctuatesasprojectsaremovedtoandfromperformingstatusorasperiodicclaimsarepaid.Theprovisionforestimatedclaimsdecreasedfromapproximately$8.6millioninfiscalyear2012 to$6.2million in fiscalyear2013,adecreaseof$2.4million,or28%,ascomparedwithdecreased fromapproximately$11.5millioninfiscalyear2011to$8.6millioninfiscalyear2012,adecreaseof$2.9million,or25%.Infiscal2013,2012and2011,provisionsweresetasideformulti‐familyprojectsinsuredbytheMIF. FortheMIFʹsclaimactivity,includingprovisionsforestimatedclaimsestablishedandthebalanceoftotalreservesforthefiscalyearsended2012and2011,seeNote8tothefinancialstatements.Non-Operating Revenues Mortgage Insurance Reserves Retained Mortgageinsurancereservesretainedtotaled$89.3millionduringfiscal2013comparedto$87.3millionduringfiscal2012and$79.7millionduringfiscal2011.Mortgagesurtaxreceiptsreceivedforfiscalyears2013,2012and2011were$134.1million,$92.5millionand$79.9respectively.Transfers to the State and its Agencies Duringfiscal2013,the2013‐2014enactedStateExecutiveBudgetrequiredtheMIFtotransferexcessreservesintheamountof$136.0milliontotheStateanditsAgencies.Ofthisamount,theMIFtransferred$32.5millionduringfiscal2013. The remaining$103.5 is required tobe transferredonorbeforeMarch31,2014provided that the reservesremainingaresufficienttoattainandmaintainthecreditratingrequiredtoaccomplishthepurposesoftheProjectPoolInsuranceAccount(asdeterminedbytheAgency).Duringfiscal2012,pursuanttotheStateExecutiveBudget,theMIFwasrequiredtotransfer$100milliontotheState.
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State of New York Mortgage Agency(A Component Unit of the State of New York)
Statements of Net Position
October31,2013 2012*
AssetsCurrentassets:
Cash‐demanddepositsunrestricted $ 2,131 $ 1,785Cash‐demanddepositsrestricted 2,899 14,551Cash‐custodiandeposits 3,608 2,086Investmentsunrestricted 22,664 17,348Investmentsrestricted 839,560 1,076,861Totalcashandinvestments 870,862 1,112,631Mortgageloansreceivable 170,985 166,965Accruedinterestreceivable:Mortgageandstudentloans 20,511 17,930Investments 9,224 10,462Other 7,177 4,933Totalcurrentassets 1,078,759 1,312,921Non‐currentAssets:Investmentsrestricted 1,393,922 1,193,892Mortgageloansreceivable 2,691,215 2,784,901Studentloansreceivable 11,678 12,552Totalnon‐currentassets 4,096,815 3,991,345Totalassets 5,175,574 5,304,266
DeferredoutflowsofresourcesAccumulateddecreaseinfairvalueofhedgingderivatives 38,979 58,292Deferredlossonrefunding 6,118 7,412Totaldeferredoutflowsofresources 45,097 65,704
LiabilitiesCurrentliabilities:Bondspayable,net 110,935 217,635Interestpayable 7,374 8,374Allowanceforanticipatedclaims 22,653 33,204Unearnedincome,accountspayableandotherliabilities 49,553 30,113AmountsduetoNewYorkStateanditsAgencies 103,534 —Totalcurrentliabilities 294,049 289,326Non‐currentliabilities:Bondspayable,net 2,717,087 2,819,961Derivativeinstruments‐interestrateswaps 45,679 64,992Postemploymentretirementbenefitspayable 39,000 34,656Totalnon‐currentliabilities 2,801,766 2,919,609Totalliabilities 3,095,815 3,208,935
NetpositionRestrictedforbondobligations 578,576 572,382Restrictedforinsurancerequirements 1,564,826 1,606,967Unrestricted(deficit) (18,546) (18,314)Totalnetposition $ 2,124,856 $ 2,161,035
*RestatedforGASB65implementation‐pleaseseenote3 See notes to financial statements.
(inthousands)
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State of New York Mortgage Agency(A Component Unit of the State of New York)
Statements of Revenues, Expenses andChanges in Net Position
Fiscal Year Ended October 31,2013 2012*
OperatingrevenuesInterestearnedonloans $ 147,635 $ 162,551Recoveries 11,185 10,546Investmentincome 21,813 30,548Netchangeinfairmarketvalueofinvestments (28,774) (7,380)Commitmentfees,insurancepremiumsandapplicationfeesearned 14,129 13,171Otherincome 693 551Totaloperatingrevenues 166,681 209,987
OperatingexpensesInterestandamortizationofdiscountondebt 106,758 124,918Bondissuancecosts 5,618 1,893Postemploymentretirementbenefitsexpense 4,344 4,281Generalexpenses 19,408 20,577OverheadassessmentbyStateofNewYork 4,556 4,410Poolinsurance 508 1,031Provisionforestimatedclaims 6,181 8,628Expensesrelatedtofederalandstategrants 909 828Other 8,803 7,225Totaloperatingexpenses 157,085 173,791Operatingincome 9,596 36,196
Non‐operating(expenses)revenuesMortgageinsurancereservesretained 89,268 87,256Federalgrants 909 828TransferstoNewYorkStateanditsAgencies (135,952) (100,000)Totalnon‐operatingexpenses (45,775) (11,916)(Decrease)Increaseinnetposition (36,179) 24,280Totalnetposition,beginningoffiscalyear 2,161,035 2,136,755Totalnetposition,endoffiscalyear $ 2,124,856 $ 2,161,035
*RestatedforGASB65implementation‐pleaseseenote3 See notes to financial statements.
(inthousands)
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State of New York Mortgage Agency(A Component Unit of the State of New York)
Statements of Cash Flows
Fiscal Year Ended October 31,2013 2012*
CashflowsfromoperatingactivitiesInterestreceivedonloans $ 147,891 $ 162,644Principalpaymentonloans 378,894 381,786Purchaseofloans (288,208) (131,729)Commitmentfees,insurancepremiumandapplication 22,148 16,736feesearnedGeneralexpenses (23,528) (21,885)Expendituresrelatedtofederalandstategrants (909) (828)Other (30,223) (16,650)Netcashprovidedbyoperatingactivities 206,065 390,074Cashflowsfromnon‐capitalfinancingactivities
Interestpaidonbonds (107,471) (127,758)Mortgagerecordingsurtaxreceipts 134,104 92,521PaymentstoNewYorkState (60,466) (100,000)Federalgrants 909 828Bondproceeds 424,725 646,005Retirementandredemptionofbonds (633,885) (823,160)Netcashusedinnon‐capitalfinancingactivities (242,084) (311,564)CashflowsfrominvestingactivitiesEarningsoninvestments 36,943 52,528Proceedsfromthesaleormaturitiesofinvestments 5,423,991 4,281,787Purchaseofinvestments (5,434,699) (4,405,476)Netcashprovidedby(usedin)investingactivities 26,235 (71,161)Net(decrease)increaseincash (9,784) 7,349Cashatbeginningoffiscalyear 18,422 11,073Cashatendoffiscalyear $ 8,638 $ 18,422Reconciliationofoperatingrevenuestonetcashprovidedbyoperatingactivities:Operatingincome $ 9,596 $ 36,196Adjustmenttoreconcileoperatingincometonetcashprovided(usedin)byoperatingactivities:Earningsoninvestment (21,813) (30,548)Interestpaymentsandamortization 106,758 124,918Unrealizedgain(loss)oninvestment 28,774 7,380Provisonforclaims 6,181 8,628Other (4,502) (13,039)ChangesinassetsandliabilitiesMortgageloansandotherloans,net 89,665 256,840Interest,feesandotherreceivables (4,824) (2,751)Studentloans 874 (6,329)Allowanceforanticipatedclaims (10,552) (4,380)Unearnedincome,accountspayableandother 1,564 8,878Postemploymentretirementbenefitspayable 4,344 4,281Netcashprovidedbyoperatingactivities $ 206,065 $ 390,074
Non‐cashinvestingactivitiesDecreaseinfairvalueofinvestments $ (34,349) $ (7,380)
*RestatedforGASB65implementation‐pleaseseenote3 See notes to financial statements.
(inthousands)
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State of New York Mortgage Agency(A Component Unit of the State of New York)
Notes to Financial StatementsOctober 31, 2013 and 20121.OrganizationandBasisofPresentationTheStateofNewYorkMortgageAgency(the”Agency”)isapublicbenefitcorporationoftheStateofNewYork(the”State”)createdbystatutein1970andforfinancialreportingpurposesisacomponentunitof theState. Thepurposeof theAgency is tomakemortgagesavailable to lowandmoderateincome first‐time homebuyers and to other qualifying homebuyers through its variousmortgageprograms. The Agency provides mortgage insurance for qualifying real property loans and toprovidecreditsupportforobligationsof theConventionCenterDevelopmentCorporation throughitsMortgageInsuranceProgram.UnderStatestatutes,theAgency’soperatingprovisionsaresubjecttoperiodic legislative renewal. Also,asof January1,1991,certainparticipants in theLow InterestRateProgrammaybesubjecttoFederalrecaptureprovisionsenactedunderfederallaw.TheAgencyisexemptfromFederal,Stateandlocalincometaxes.InApril2009,theAgency’sstatutoryauthoritytopurchaseeducationloanswasupdatedandexpandedinordertopermittheAgencytoworkwiththeNewYorkStateHigherEducationServicesCorporation(“HESC”)indevelopinganewprogramto offer education loans to eligible studentsattending colleges anduniversities inNewYorkState(“Student Loan Program”). The financial statements of the Agency include the accounts of therespectivebondholderfundsaswellastheMortgageInsuranceFund,StudentLoanProgramandtheGeneralOperatingFund.Pursuant to the general resolutions for the Agency’s bond issues and in accordance with theMortgage Insurance Program legislation, separate funds have been established to record alltransactions relating to each of the bond resolutions and for theMortgage Insurance Program.Generally, theMortgage Insurance Fund and each bond fund’s assets are available only for thepurposesspecifiedunder therespectivebondresolutionsand/orpursuant to theAgency’senablinglegislation.
a.BondholderFundsPriorto1983,theAgencyissuedtax‐exemptmortgagerevenuebondsandappliedtheproceedstothepurchaseofexistingresidentialmortgage loansfromfinancial institutionsoperating in theState,ontheconditionthatthepurchaseproceedsbemadeavailablefornewresidentialmortgageloanswithintheState.In1982,theenablinglegislationwasamendedtopermitapplicationofbondproceedsfordirect issuanceof forwardcommitments fornewmortgage loans throughparticipatingoriginators.Thenewlyoriginated loansareapprovedandacquiredby theAgencyandareservicedbyeligibleservicers doing business in the State. Mortgages originated through the Agency’s mortgageprograms are subject to certain Federal and/or State regulations and limitations. TheAgency isauthorized,however,andhasissuedobligations,theinterestonwhichisfederallytaxable.Allacquiredmortgage loansarecollateralizedbyfirst liens. Ifrequired, themortgagesare insuredwith primarymortgage insurance. In addition, pool insurance coverage is provided in amountsranging from 4%‐10% of the originalmortgage pool amount of a bond series. The assets of theAgency’sbondholderfundsarerestrictedastopurposeundertherespectivebondresolutions.Mortgageescrowbalancesaremaintainedbyeach financial institution servicing themortgages forthe credit of themortgagors. The servicers are responsible for the collections and disbursem*ntsmade to and from themortgagors’ escrowaccounts. Mortgage servicers annually receive a creditequalto2.93%ofactualmortgagepaymentscollectedlessprepaymentsandcurtailmentswhichtheyapplyasacredittotheirapplicableNewYorkStatetaxliability.
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1.OrganizationandBasisofPresentation (continued)b.MortgageInsuranceFundTheAgencyoperatesitsMortgageInsuranceFund(the”Program”orthe“MIF”)pursuanttoastatuteenacted in 1978 toencourage the investmentbyapproved lenders in communitieswheremortgagecapitalisfoundtobeinsufficientforthepreservationandrehabilitationofaffordablehousing.UndertheProgram,qualifyingmortgagesgrantedbyapprovedlenderswithintheStatemaybeinsured,upto 50% of the principal balance, but up to 75%with respect to rehabilitation loans under certainconditions,and100%oftheprincipalbalancefor loansmadebypublicpension fundsandspecifiedpublic benefit corporations of the State. The net assets of the program are restricted by statutoryprovisions(seeNote2i).In1989, theMIFwasenhancedbyState legislation thatexpanded theProgram’sauthority to issuemortgage insurance for loans in specified economic development zones and to projects providingaffordablehousing or are financed bygovernment entities. In addition, theProgramwasgrantedauthorizationtounderwritemortgagepoolinsurancefortheAgency’smortgageprograms.The1989enhancementstothestatutearesubjecttoperiodicrenewalbythelegislature.Moody’sInvestorsServiceratestheclaimspayingabilityoftheMIF’sProjectPoolInsuranceAccountand theSingleFamilyPool InsuranceAccount areeach rated“Aa1”;FitchRatings rates the claimspayingabilityof theProjectPool InsuranceAccountand theSingleFamilyPool InsuranceAccount“AA‐“and“AA+”,respectively.As of October 31, 2013 and 2012, the MIF has outstanding mortgage insurance policies ofapproximately$3.00billionand $2.80billion respectively,ofwhich at least 20%hasbeenprovidedandreportedaspartoftherestrictednetposition.Insurancereservesforperformingmortgageloansareestablishedat20%of theoriginalprincipalamountexcept forspecialneeds facilitieswhere theinsurancereserveisestablishedat40%oftheoriginalprincipalamount.Whenaninsuredmortgageisindefault, the insuredamount is immediately reservedasa liabilityreserveat100%of theoriginalprincipalamountoftheinsuredmortgageloan.Legislation adopted in 2004 added an account to theAgency’sMIF, theDevelopmentCorporationCreditSupportAccount,andexpandedthepowersoftheMIFtopermittheAgencytoprovidecreditsupport for the bonds and ancillary bond facilities of the Convention Center DevelopmentCorporation, a subsidiaryof theNewYorkStateUrbanDevelopmentCorporation. The legislationfurther limits the aggregate annual amount to be transferred from the Special Account to theDevelopmentCorporationCreditSupportAccountwithin theMIFduringany twelvemonthperiodendingonMarch31sttothelesserof$50millionortheaggregateoftheamountsrequiredundersuchcontracts.TheAgencysetaside$34.4millionforthispurpose.SuchfundsremainondepositforthispurposeasofOctober31,2013and2012.
c.GeneralOperatingFundTheexpensesofadministrativeservicesprovidedfortheAgencyareaccountedforwithintheGeneralOperatingFund. Servicesprovided for theMortgage InsuranceFund are accounted for separatelywithintheMortgageInsuranceFund.
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2.SignificantAccountingPolicies
a.BasisofAccountingTheAgencyutilizes theaccrualbasisofaccountingwhereinrevenuesare recognizedwhenearnedand expenseswhen incurred.The financial statements areprepared in accordancewith generallyaccepted accounting principles as prescribed by the Governmental Accounting Standards Board(“GASB”). b.CashCashdemanddepositaccountsareusedforthecollectionoffundsreceivedfromtheservicingbanksthroughout themonth.Theseamountsareremitted to theAgencyduring themonth following thefinancialstatementdateandappliedtothemortgageloanandinterestaccrualbalances.Cash custodian deposits represent mortgage payments in‐transit held by the servicing financialinstitutionsandnotyetremittedtotheAgency.
c.InvestmentsInvestmentsotherthaninvestmentagreementsarerecordedattheirfairvalues,whicharebasedonquoted market prices and matrix pricing for securities that do not trade actively. Investmentagreementsarereportedatamortizedcost.For thepurposeoffinancialstatementpresentation, theAgencydoesnotconsideranyofitsinvestmentstobecashequivalents.
d.MortgageLoansReceivableMortgageloansonrealestatearestatedattheirunpaidprincipalbalancewhereappropriate.TheAgencydoesnotprovideareserveagainstuninsuredmortgagesreceivablebecauseallloanshadat least20percentequityatorigination.Further,mostof these loansarewell‐seasoned (70%wereoriginatedin2004orearlier)andallmortgagesarecoveredbyapoolinsurancepolicy.MortgageacquisitioncostsconsistprimarilyofinspectionandinitialprocessingfeesincurredeitherdirectlybytheAgencyorbyservicingfinancialinstitutionsrelativetothepurchaseofmortgagesthathavebeenreimbursedbytheAgency.
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2.SignificantAccountingPolicies(continued)e.BondsPayableSerialandtermbondsarestatedattheirprincipalamountsoutstanding,netofunamortizedbonddiscountor premium. Serial and term bonds aremaintained at their accreted values for purposes of financialreportingtothedateoftherespectivebalancesheet.Inaccordancewiththerespectivebondresolutions,fundsareavailableto thetrusteetopaydebtserviceonbondswhendue,principallyApril1andOctober1.
f.UnamortizedBondDiscountandPremium Bonddiscountandpremiumareamortizedusingthebonds‐outstandingmethodwhichyieldsalevelrateofexpenseovertherespectivelivesofeachbondseries.TheremainingunamortizedportionsofsuchcostsrelatingtobondswhichareretiredpriortomaturitybytheAgencyintheopenmarketareincludedasadeductioninthecomputationofgainorlossonearlyextinguishmentofdebt.TheAgency’sredemptionsusingproceedsofrefundingbondsresultedinlossesthatweredeferredandamortizedovertheoriginallifeoftherefundedbondsorthelifeoftherefundingbonds,whicheverisshorter.
g.BondIssuanceCostsBondissuancecostsarerecognizedasanexpenseintheperiodincurred.
h.AccruedVacationBenefitsVacationbenefitsarerecordedintheperiodearned.
i.MortgageInsuranceBy statute, all costs of providingmortgage insurance, including claims, are chargeable against a Statemortgagerecording tax surcharge. TheStatemortgage recording tax surcharge is adedicated tax revenue stream receiveddirectlybytheAgencyandrecorded intheMIF’sSpecialAccount(the“SpecialAccount”). SurchargetaxreceiptsandapplicationfeesinexcessofexpensesandreserverequirementsareheldintheSpecialAccount.Annually,iftheamountondepositintheSpecialAccountisdeterminedtobeinexcessoftherequiredamountasofMarch31,theexcessisremittedtotheStatebyMay31ofthatyear.
j.InterestandDiscountEarningsonMortgagesInterest revenue is accrued and recognized as revenuewhen earned. Discount onmortgage loans aredeferredandamortizedovertheaveragelifeofthemortgageloansoutstanding,whichisestimatedattenyears.
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2.SignificantAccountingPolicies(continued)k.UseofEstimatesThepreparation of the financial statements in accordancewith accountingprinciples generallyaccepted in the United States of America requires management to make estimates andassumptionsthataffecttheamountsanddisclosuresincludedintheAgency’sfinancialstatementsduringthereportingperiods.Actualamountscoulddifferfromtheseestimates.
l.DerivativeInstrumentsThe Agency has entered into various interest rate swaps contracts in order tomanage risksassociated with interest on its bond portfolio. The Agency recognizes the fair value of allderivative instruments as either an asset or liability on its statements of net positionwith theoffsetting gains or losses recognized in earnings or as either deferred inflows or outflows ifdeemedaneffectivehedge.
m.UpcomingAccountingPronouncementsInMarch2012,GASBissuedStatementNo.66,TechnicalCorrections–2012.TheobjectiveofthisStatementisto improve accounting and financial reporting by state and local governmental entities by resolvingconflicting guidance that resulted from the issuance of two pronouncements–StatementsNo. 54, FundBalanceReportingandGovernmentalFundTypeDefinitions,andNo.62,CodificationofAccountingandFinancialReportingGuidanceContained in Pre‐November 30, 1989 FASB andAICPA Pronouncements.TheprovisionsofthisStatementareeffectiveforfinancialstatementsforperiodsbeginningafterDecember15, 2012. TheAgencydoesnot anticipate the implementation of this standard tohave an impact on itsfinancialstatements.
InJune2012,GASBissuedStatementNo.67,FinancialReportingforPensionPlans.TheobjectiveofthisStatementistoimprovetheusefulnessofpensioninformationincludedinthegeneralpurposeexternalfinancialreports(financialreports)ofstateandlocalgovernmentalpensionplansformakingdecisionsandassessingaccountability.TheprovisionsofthisStatementareeffectiveforfinancialstatementsforperiodsbeginningafterJune15,2013.TheAgencydoesnotanticipatethattheimplementationofthisstandardwillhaveanimpactonitsfinancialstatements.InJune2012,GASBissuedStatementNo.68,AccountingandFinancialReportingforPensions(“GASB68”).TheprimaryobjectiveofthisStatementistoimproveaccountingandfinancialreportingbystateandlocalgovernments for pensions. It also improves information provided by state and local governmentalemployers about financial support forpensions that isprovidedbyother entities.Theprovisionsof thisStatement are effective for financial statements forperiodsbeginning after June 15, 2014.TheAgency iscurrentlyevaluatingtheimpactoftheimplementationofthisstandardwillhaveonitsfinancialstatements.InJanuary2013,GASBissuedStatementNo.69,GovernmentCombinationsandDisposalsofGovernmentOperations (“GASB 69”). The objective of this Statement is to improve the accounting formergers andacquisitions among state and local governments by providing guidance specific to the situations andcirc*mstances encounteredwithin the governmental environment. The provisions of this Statement areeffective for financial statements for periods beginning afterDecember 15, 2013. TheAgency does notanticipatethattheimplementationofthisstandardwillhaveanimpactonitsfinancialstatements.
27
2.SignificantAccountingPolicies(continued)InFebruary2013,GASB issuedStatementNo.70,AccountingandFinancialReporting forNonexchangeFinancialGuarantees (“GASB 70”).The objective of this Statement is to improve the comparability of financial statementsamonggovernmentsbyrequiringconsistentreportingbythosegovernmentsthatextendand/orreceivenonexchangefinancialguarantees.TheprovisionsofthisStatementareeffectiveforfinancialstatementsforperiodsbeginningafterJune15,2013. TheAgencydoesnotanticipatethatthe implementationof thisstandardwillhavean impacton itsfinancialstatements.
n.FederalGrantsGrants due from Federal, State and local governments are recognized as non‐operating revenue as the relatedexpendituresareincurred.
o.RevenueandExpenseClassification
Operatingrevenueconsistsprimarilyofinterestonloans,earningsoninvestments,recoveries,insurancepremiums,commitment fees and application fees. Revenue is accrued and recognized as revenuewhen earned.Operatingexpensesincludeinterestexpenseonbonds,generalexpensesandcertaininsuranceclaimsactivity.Allotherrevenueandexpensesareconsiderednon‐operating.
p.UseofNetPosition Whenbothrestrictedandunrestrictedassetsareavailableforaparticularrestricteduse,itistheAgency’spolicytouserestrictedresourcesfirst,andthenunrestrictedasneeded.
q.ReclassificationsCertainreclassificationshavebeenmadetoprioryearbalancesinordertoconformtocurrentyearpresentation.
28
Restated
AsofOctober31,2011NetPosition 2,223,665$ (86,910)$ 2,136,755$
FortheyearendedOctober31,2012Interestonmortgages 162,588 (37) 162,551Otheroperatingincome 1,167 (616) 551Amortizationofbondissuancecosts (2,768) 2,768 —Bondissuancecosts — (1,893) (1,893)Otheroperatingexpenses (18,162) 10,937 (7,225)Changesinnetposition 13,121 11,159 24,280
AsofOctober31,2012Unamortizedcostofissuance 76,790 (76,790) —Mortgageloansreceivable,net(Noncurrent) 2,784,087 814 2,784,901Unearnedincome,accountspayableandotherliabilities 30,338 225 30,113Bondspayable,net(Noncurrent) 2,812,549 7,412 2,819,961Deferredoutflowofresources‐Deferredlossonrefunding — (7,412) 7,412Netposition 2,236,786$ (75,751)$ 2,161,035$
AsPreviouslyReported Adjustment
(inthousands)
3.RecentAdoptionofGASBAccountingPronouncements InMarch2012,GASBissuedStatementNo.65,ItemsPreviouslyReportedasAssetsandLiabilities(“GASB65”),TheobjectiveofthisStatementistoeither(a)properlyclassifycertainitemsthatwerepreviouslyreportedasassetsandliabilitiesasdeferredoutflowsofresourcesordeferredinflowsofresourcesor(b)recognizecertainitems that were previously reported as assets and liabilities as outflows of resources (expenses orexpenditures)or inflowsof resources (revenues).Theprovisionsof thisStatementareeffective for financialstatementsforperiodsbeginningafterDecember15,2012;howevertheAgencyelectedtoearly‐adoptGASB65duringtheyearendedOctober31,2013.ImpactoftheAdoptionofGASB65
Asnotedabove,theAgencyadoptedGASBStatementNo.65duringthecurrentfiscalyear.Inconnectionwiththeadoptionof thisnew standard allof theAgency’s accountswere analyzedbymanagement inorder toassess the impact on the financial statements. The implementation of this new standard resulted in themodificationofthemethodpreviouslyusedtoaccountforthecostof issuanceassociatedwiththeAgency’snumerous bond issuances, commitment and financing fees received by theAgency in connectionwith theissuance of project loans and the reclassification of the Agency’s deferred loss on bond defeasance to adeferredoutflowofresources, .Inaccordancewiththerequirementsofthisnewstandard,theAgency’sNetPosition as ofOctober 31, 2011 and theAgency’s Statement of Revenues, Expenses and Changes inNetPositionwere restated to retroactively adjust theAgency’s financial statements.As a result the followingrestatementshavebeenmadetotheAgency’sfinancialstatements.
29
October31,2013: TimeDeposits,MoneyMarket U.S. U.S. TotalandSavings Treasury Government Fair
Category Accounts Obligations Agencies Value
Investedrevenues $ 1,883 317,935$ 458$ 320,276$Mortgageinsurancereserves — 1,619,847 97,946 1,717,793Mortgageacquisitionandotherbondproceeds — 19,509 — 19,509Bondholderreserves 48,973 138,849 10,746 198,568Total $ 50,856 2,096,140$ 109,150$ 2,256,146$
October31,2012: TimeDeposits,MoneyMarket U.S. U.S. TotalandSavings Treasury Government Fair
Category Accounts Obligations Agencies Value
Investedrevenues $ 2,662 300,027$ 367$ 303,056$Mortgageinsurancereserves — 1,537,990 105,678 1,643,668Mortgageacquisitionandotherbondproceeds — 138,437 — 138,437Bondholderreserves 48,973 153,967 — 202,940Total $ 51,635 2,130,421$ 106,045$ 2,288,101$
(inthousands)
(inthousands)
AgencyfundsareinvestedinaccordancewiththeinvestmentguidelinesapprovedannuallybytheAgency’sboard,whichareincompliancewiththeNewYorkStateComptroller’sInvestmentGuidelines.Alloftheaboveinvestmentsthataresecuritiesareinregisteredform,andareheldbyagentsoftheAgencyorbythe trustee under the applicable bond resolution, in theAgency’s name. The agents or their custodians takepossessionofthesecurities.
4.InvestmentsTheAgency’sinvestmentsatOctober31,2013andOctober31,2012,excludingaccruedinterest,consistedofthefollowing:
30
Fair Less MoreValue Than1 1to5 6to10 Than10
TimeDeposits $ 59,765 $ — $ 10,907 $ 5,525 $ 43,333TrustSavingsAccounts/CDs 1,883 1,883 — — —MunicipalBonds 458 — — — 458U.S.TreasuryBills 427,625 427,625 — — —U.S.TreasuryNotes&Bonds 1,668,515 400,496 702,499 565,520 —U.S.GovernmentAgencies 97,900 25,718 72,182 — —Total $ 2,256,146 $ 855,722 $ 785,588 $ 571,045 $ 43,791
InvestmentMaturitiesinYearsatOctober31,2013areasfollows:
(inthousands)
InterestRateRiskTheAgency’sexposure tofairvalue lossesarisingfromrising interestrates is limitedby theshorttermdurationof38%and46%of theAgency’s investments for fiscalyearsended2013and2012,respectively.
4.Investments(continued)PermittedInvestmentsAllbondproceedsandrevenuescanonlybe invested inSecurities [definedas (i)obligations theprincipalofand interestonwhichareguaranteedbytheUnitedStatesofAmerica;(ii)obligationsoftheUnitedStatesofAmerica;(iii)obligationstheprincipalofandinterestonwhichareguaranteedbytheState;(iv)obligationsoftheState; (v)obligationsofanyagencyof theUnitedStatesofAmerica; (vi)obligationsofanyagencyof theState;(vii)obligationstheprincipalofandinterestonwhichareguaranteedbyanagencyorinstrumentallyoftheUnitedStatesofAmerica;(viii)obligationsoftheFederalNationalMortgageAssociation(“FNMA”)],TimeDeposits and Certificates of Deposit. Securities are purchased from Primary and approved Dealers, andSecuritiesaredeliveredtotheapplicableCustodian/Trusteewhor*cordstheinvestment.CollateralizedTimeDepositAgreementsandCertificatesofDepositmayonlybeentered intowithbanksortrustees rated at leastwithin the second highest rating categorywithout regard to gradationswithin suchcategory byMoody’s Investors Service or Standard&Poor’s.Collateralized TimeDepositAgreements andcertificatesofdepositarecollateralizedataminimumof103%oftheprincipalamountoftheagreementandmarkedtomarketweekly.ThecollateralconsistsofUnitedStatesgovernmentobligations,othersecuritiestheprincipalofandinterestonwhich are guaranteed by the United States, Government National Mortgage Association obligations andobligationsofa*genciesand instrumentalitiesof theCongressof theUnitedStatesandobligationsofFNMA.ThecollateralisdeliveredtotheCustodianandheldforthebenefitoftheAgency.
31
Balanceat Prepayments, BalanceatOctober31, Transfersand Purchaseof October31,
2012 Amortization OtherCredits NewLoans 2013
HomeownerMortgageRevenue $ 2,139,637 (76,627)$ (219,353)$ 192,059$ 2,035,716$MortgageRevenue 808,531 (24,104) (57,214) 96,149 823,362HomeownershipProgram 3,698 (214) (362) — 3,122TotalMortgageReceivable $ 2,951,866 (100,945)$ (276,929)$ 288,208$ 2,862,200$
October31,2012:
Balanceat Prepayments, BalanceatOctober31, Transfersand Purchaseof October31,
2011 Amortization OtherCredits NewLoans 2012
HomeownerMortgageRevenue $ 2,324,924 (81,401)$ (228,645)$ 124,759$ 2,139,637$MortgageRevenue 879,501 (25,252) (45,718) — 808,531HomeownershipProgram 4,281 (229) (354) — 3,698TotalMortgageReceivable $ 3,208,706 (106,882)$ (274,717)$ 124,759$ 2,951,866$
(inthousands)
(inthousands)
5.MortgageLoansReceivableTheprincipalbalancesofmortgageloansreceivablesfortheyearsendedOctober31,2013andOctober31,2012wereasfollows:October31,2013:
32
HomeownerMortgageRevenue:Uninsured 7,895 $ 653,324F.H.A.(insured) 2 213Privatemortgageinsurance(attimeofpurchase) 16,961 1,385,399DeferredParticipation — (3,220)
24,858 2,035,716
MortgageRevenue:Uninsured 2,727 315,532F.H.A.(insured) 9 106Privatemortgageinsurance(attimeofpurchase) 4,770 504,504DeferredParticipation — 3,220
7,506 823,362
HomeownershipProgram:Uninsured 4 246Privatemortgageinsurance(attimeofpurchase) 63 2,876
67 3,122Total 32,431 $ 2,862,200
October31,2012:
HomeownerMortgageRevenue:Uninsured 8,339 $ 662,557F.H.A.(insured) 1 21Privatemortgageinsurance(attimeofpurchase) 18,474 1,480,847DeferredParticipation — (3,788)
26,814 2,139,637
MortgageRevenue:Uninsured 2,682 300,956F.H.A.(insured) 12 160Privatemortgageinsurance(attimeofpurchase) 4,985 503,627DeferredParticipation — 3,788
7,679 808,531
HomeownershipProgram:Uninsured 5 272Privatemortgageinsurance(attimeofpurchase) 70 3,426
75 3,698Total 34,568 $ 2,951,866
(inthousands)Loans
Loans(inthousands)
Numberof OutstandingMortgage Principal
Balance
Numberof OutstandingMortgage Principal
Balance
5.MortgageLoansReceivable(continued) MortgageloansoutstandingwereasfollowsatOctober31,2013andOctober31,2012:October31,2013:
33
PercentofPrincipalOutstandingofLoansinArrearsto
DaysinArrears TotalLoans
HomeownerMortgageRevenue:
60 247 $ 19,791 0.97%90plus 931 98,727 4.84%
1,178 118,518 5.81%MortgageRevenue:
60 66 6,570 0.80%90plus 201 21,353 2.60%
267 27,923 3.40%HomeownershipProgram:
60 2 121 3.88%90plus 6 354 11.34%
8 475 15.21%Combined:
60 315 26,482 0.93%90plus 1,138 120,434 4.21%
1,453 $ 146,916 5.13%
PercentofPrincipalOutstandingofLoansinArrearsto
DaysinArrears TotalLoans
HomeownerMortgageRevenue:
60 259 $ 21,656 1.04%90plus 824 86,577 4.04%
1,083 108,233 5.08%MortgageRevenue:
60 64 6,235 0.77%90plus 157 14,388 1.79%
221 20,623 2.56%HomeownershipProgram:
60 3 183 4.96%90plus 6 419 11.32%
9 602 16.28%Combined:
60 326 28,074 0.95%90plus 987 101,384 3.44%
1,313 $ 129,458 4.39%
NumberofLoansinArrears
(inthousands)
NumberofLoansinArrears
Principal(inthousands)
Principal
October31,2012:
5.MortgageLoansReceivableTheprincipalbalancesofmortgageloansreceivablesfortheyearsendedOctober31,2013andOctober31,2012wereasfollows:October31,2013:
34
October31,2013:Amortization
Bonds ofBond BondsOutstanding Matured/ Premium OutstandingatOctober31, Called/ andDeferred atOctober31,
2012 Redeemed Issued LossAmounts 2013
HomeownerMortgageRevenue $ 2,223,488 (447,520)$ $ 225,900 (6)$ 2,001,862$
MortgageRevenue 800,263 (185,980) 198,825 (331) 812,777
NYHELPs(StudentLoanprogram) 13,845 (385) — (77) 13,383
TotalBondsOutstanding $ 3,037,596 (633,885)$ $ 424,725 (414)$ 2,828,022$
October31,2012:Amortization
Bonds ofBond BondsOutstanding Matured/ Premium OutstandingatOctober31, Called/ andDeferred atOctober31,
2011 Redeemed Issued LossAmounts 2012
HomeownerMortgageRevenue $ 2,318,281 (742,945)$ $ 646,005 2,147$ 2,223,488$
MortgageRevenue 871,530 (71,100) — (167) 800,263
NYHELPs(StudentLoanprogram) 23,417 (9,115) — (457) 13,845
TotalBondsOutstanding $ 3,213,228 (823,160)$ $ 646,005 1,523$ 3,037,596$
(inthousands)
(inthousands)
6.BondsPayableChangesinbondspayable,netfortheyearendedOctober31,2013andOctober31,2012wereasfollows:
35
Total TotalFiscalYear Serial Term Bonds Interest Debt
EndingOct31, Bonds Bonds Payable Payable Service
2014 $ 80,705 3,645$ 84,350$ 54,793$ 139,143$2015 85,505 12,400 97,905 52,313 150,2182016 82,480 13,130 95,610 49,863 145,4732017 78,540 15,080 93,620 47,236 140,8562018 47,875 27,735 75,610 44,554 120,164
2019‐2023 221,125 221,170 442,295 181,362 623,6572024‐2028 1,670 405,655 407,325 104,700 512,0252029‐2033 — 337,130 337,130 54,359 391,4892034‐2038 — 297,150 297,150 24,178 321,3282039‐2043 — 69,315 69,315 9,319 78,6342044‐2047 — 935 935 2 937
TotalDebtServiceRequirement 597,900 1,403,345 2,001,245 622,679 2,623,924Unamortizedbondpremium — — 617 — —
Total $ 597,900 1,403,345$ 2,001,862$ 622,679$ 2,623,924$
(inthousands)
6.BondsPayable(continued)HomeownerMortgageRevenueBondsOnehundredeighty‐twoHomeownerMortgageRevenueBondserieshavebeenissuedbetween1988and2013 ina totaloriginalamountof$9,976,813,000. AtOctober31,2013, the interestratesfor the fixedratebondsoutstandingrangedfrom .40%to6%andtheinterestonthevariableratedebtrangedfrom .03%to.27%.ThescheduleofTotalAnnualMaturitiesasofOctober31,2013wasasfollows:
36
LastOriginally Currently Rangeof Remaining
Series Issued Outstanding InterestRates Maturity
78A $ 10,505 1,185$ 5.0% 201487 77,085 50 5.15% 2017100 9,390 125 4.95% 2015105 23,215 3,205 3.85%‐4.25% 2015107 1,640 240 4.25% 2014109 125,000 54,060 4.9%‐4.95% 2034110 99,650 19,940 4.0%‐4.4% 2017111 114,760 58,415 4.0%‐4.55% 2023112 10,240 3,345 3.65%‐4.0% 2017113 90,000 3,010 4.7%‐4.95% 2017115 35,000 35,000 ResetWeekly 2034116 125,000 94,280 4.05%‐4.80% 2034117 44,280 23,055 4.05%‐4.65% 2025120 35,000 24,380 4.05%‐4.75% 2025121 400 120 4.00% 2017122 40,000 40,000 ResetWeekly 2035123 28,760 22,145 4.6%‐4.75% 2029124 36,240 5,370 3.85%‐4.0% 2015125 35,000 35,000 ResetWeekly 2036127 20,605 15,675 4.7%‐4.95% 2036128 45,395 4,990 4.15%‐4.25% 2015129 34,000 34,000 ResetWeekly 2035130 48,055 33,690 4.4%‐4.8% 2037131 28,725 9,155 3.90%‐4.05% 2017132 34,000 34,000 ResetDaily 2037133 73,970 8,530 4.6%‐6% 2032135 34,000 34,000 ResetDaily 2037137 75,205 63,815 4.55%‐4.7% 2031138 15,795 9,490 3.75%‐3.9% 2017139 34,000 34,000 ResetDaily 2037140 40,435 24,380 4.6%‐4.75% 2037
(inthousands)
6.BondsPayable(continued)OutstandingHomeownerMortgageRevenueBondsAtOctober 31, 2013, the interest rate for fixed rateHomeownerMortgageRevenueBonds outstandingrangedfrom.40%to6%.ThescheduleofHomeownerMortgageRevenueBondsoutstandingbyseriesasofOctober31,2013wasasfollows:
37
LastOriginally Currently Rangeof Remaining
Series Issued Outstanding InterestRates Maturity
141 $ 15,565 6,340$ 3.85%‐4.0% 2017142 34,000 34,000 ResetDaily 2037143 60,000 43,995 4.2%‐4.9% 2037144 30,000 30,000 ResetDaily 2037145 22,980 1,390 4.95% 2023146 37,020 15,015 3.8%‐4.1% 2017147 50,000 50,000 ResetWeekly 2037148 53,905 9,970 4.5%‐4.9% 2022149 21,095 10,870 3.7%‐3.95% 2017150 50,000 50,000 ResetDaily 2037152 29,765 9,865 3.75%‐4.125% 2017153 50,000 50,000 ResetWeekly 2047155 32,145 15,160 3.85%‐4.375% 2018158 50,000 3,310 4.75%‐5.0% 2015159 60,000 60,000 ResetWeekly 2038160 11,560 6,270 3.05%‐4.0% 2018162 25,000 25,000 ResetWeekly 2039163 66,825 61,005 1.85%‐4.45% 2031164 84,365 68,005 1.0%‐3.4% 2022165 50,000 48,625 4%‐4.75% 2042166 107,585 89,570 1.514%‐3.999% 2021167 10,695 10,695 3.1%‐4.1% 2022168 50,065 47,755 .6%‐4.125% 2040169 43,060 40,225 .6%‐2.6% 2021170 19,940 19,940 2.4%‐3.9% 2027171 12,000 12,000 3.40% 2022172 150,000 148,175 .7%‐4.203% 2027175 82,660 81,510 .605%‐4.116% 2028176 66,835 66,745 1.45%‐3.75% 2042177 33,200 31,295 .40%‐3.05% 2027178 79,370 79,370 3.5%‐4.9% 2043179 13,090 13,090 .65%‐1.65% 2017180 33,405 33,405 .90%‐4.10% 2023
Unamortizedbondpremium — 617Total $ 2,961,480 2,001,862
(inthousands)
6.BondsPayable(continued)OutstandingHomeownerMortgageRevenueBonds(continued)
38
FixedSwapNominal Interest SwapOffset NetSwapAmount Payments Payments Interest
$ — 14,219$ 1,329$ 12,890$ — 14,219 1,329 12,890
98,000 13,564 1,272 12,292 94,675 9,817 869 8,948 161,400 6,532 521 6,011 8,000 11,162 1,122 10,040 11,960 9,729 980 8,749 31,505 6,254 630 5,624 14,460 966 97 869
$ 420,000 86,462$ 8,149$ 78,313$
(inthousands)
Total
FiscalYear
20142015201620172018
2019‐20232024‐20282029‐20332034‐2038
EndingOct31,
6.BondsPayable(continued)OutstandingHomeownerMortgageRevenueBonds(continued)AsofOctober31,2013, theadditionaldebtservicerequirementsof theAgency’shedgedvariableratedebtonassociated derivative instruments for the period hedged are as follows. These amounts assume that currentinterestratesonOctober31,2013andthevariable‐rateoffsetthefixedratesofhedgingderivative instrumentswillremainthesameforthetermoftherespectiveswaps. The table below represents the additional debt service payments resulting from theHomeownerMortgageRevenueBondhedgedderivativeinstruments
39
FiscalYear Serial Term Bonds Interest DebtEndingOct31, Bonds Bonds Payable Payable Service
2014 $ 21,575 $ — 21,575$ 28,698$ 50,273$2015 23,765 — 23,765 27,686 51,4512016 21,890 950 22,840 27,240 50,0802017 25,495 635 26,130 26,704 52,8342018 17,080 8,065 25,145 31,294 56,439
2019‐2023 64,920 76,560 141,480 119,063 260,5432024‐2028 7,630 119,265 126,895 89,388 216,2832029‐2033 — 135,420 135,420 62,686 198,1062034‐2038 — 151,685 151,685 37,409 189,0942039‐2043 — 133,650 133,650 10,007 143,657
TotalDebtServiceRequirement 182,355 626,230 808,585 460,175 1,268,760Unamortizedbond
premium — — 4,192 — —Total $ 182,355 $ 626,230 812,777$ 460,175$ 1,268,760$
(inthousands)
6.BondsPayable(continued)MortgageRevenueBondsFifty‐oneMortgageRevenueBond serieshave been issued between 1984 and 2013 in a total originalamountof$4,379,529,000. AtOctober31,2013, the interest rates for the fixed ratebondsoutstandingrangedfrom.31%to5.45%.
TheScheduleofTotalAnnualMaturitiesatOctober31,2013wasasfollows:
40
Originally Currently Rangeof RemainingSeries Issued Outstanding InterestRates Maturity
29th $ 101,280 2,485$ 5.45% 203131stA 55,780 40,975 5.2%‐5.3% 203132nd 26,045 2,335 4.55% 201433rdA 44,505 16,330 4.1%‐4.75% 202335th 62,760 53,740 4.5%‐4.8% 203036th 27,240 1,555 4.10% 201639TH 57,385 49,945 3.25%‐5.0% 202840TH 22,615 15,225 1.9%‐3.125% 201738THB 30,000 28,810 3.07% 204141st 14,820 13,990 1.30%‐4.0% 202842nd 5,180 3,465 1.30%‐2.5% 201843rd 14,330 8,060 1.30%‐2.3% 201744th 38,555 30,135 2.05%‐4.35% 2024
38THC 66,000 60,530 3.01% 204145th 44,000 37,245 1.5%‐4.5% 2029
38THD 138,110 129,610 3.55% 204138THE 35,000 32,850 3.55% 203546TH 97,855 76,145 2.1%‐5.0% 202947TH 17,555 6,680 1.5%‐2.1% 201548TH 110,905 110,905 2.625%‐3.75% 204149TH 54,755 54,755 2.45‐4.0% 204350TH 33,165 32,815 .31‐3.15% 2027
Unamortizedbondpremium — 4,192Total $ 1,097,840 812,777$
(inthousands)
6.BondsPayable(continued)OutstandingMortgageRevenueBondsAtOctober 31, 2013, the interest rate for fixed rateMortgageRevenueBonds outstanding ranged from.31%to5.45%.ThescheduleofMortgageRevenueBondsoutstandingbyseriesasofOctober31,2013wasasfollows:
41
TotalFiscalYear Interest Bonds Debt
EndingOct31, Payable Payable Sevice
2014 $ 607 445$ 1,052$2015 582 775 1,3572016 544 1,045 1,5892017 484 1,540 2,0242018 418 1,405 1,823
2019‐2023 1,265 4,270 5,5352024‐2027 390 3,805 4,195
TotalDebtServiceRequirement 4,290 13,285 17,575Unamortizedbond
premium — 98 —Total $ 4,290 13,383$ 17,575$
(inthousands)
6.BondsPayable(continued)StudentLoanProgram
TheAgency,doingbusiness asThe StateofNewYorkHigherEducation FinanceAuthority issued theNYHELPsEducationalLoanRevenueBond, 2009SeriesA in a totaloriginal amountof $97,795,000.AtOctober 31, 2013, the amountof $13,285,000 remainedoutstandingwith the interest rates ranging from3.25%to5.25%.ThescheduleofTotalAnnualMaturitiesasofOctober31,2013wasasfollows:
42
7.OwnedRealEstate
AtOctober31,2013andOctober31,2012otherassetsconsistedprimarilyofOwnedRealEstateforwhichthebalanceswereasfollows:
October31,2013:
Numberof Book AppraisedLoans Value Value
HomeownerMortgageRevenue 68 $ 5,120 6,118$
MortgageRevenue 11 666 976
OtherAssets 1 90 145
80 $ 5,876 7,239$
October31,2012:
Numberof Book AppraisedLoans Value Value
HomeownerMortgageRevenue 30 $ 2,302 3,102$
MortgageRevenue 8 659 1,228
OtherAssets — 1,972 —
38 $ 4,933 4,330$
($inthousands)
BondholderFunds
BondholderFunds
($inthousands)
43
8.AllowanceforAnticipatedClaims
TheMortgageInsuranceFundclaimactivityforthefiscalyearsendedOctober31,2013andOctober31,2012wasasfollows:
October31,2013:
Project Pool Primary TotalInsurance Insurance Insurance Insurance
ReconciliationofAllowanceforClaimsAllowance,beginningofyear $ 33,204 $ — $ — $ 33,204Currentyearprovisionforestimatedclaims 3,879 2,175 127 6,181Currentyearadjustmenttoclaimsstatus (11,185) — — (11,185)Claimspaid,net (3,245) (2,175) (127) (5,547)Allowance,endofyear $ 22,653 $ — $ — $ 22,653
October31,2012:
Project Pool Primary TotalInsurance Insurance Insurance Insurance
ReconciliationofAllowanceforClaimsAllowance,beginningofyear $ 37,584 $ — $ — $ 37,584Currentyearprovisionforestimatedclaims 7,035 1,489 104 8,628Currentyearadjustmenttoclaimsstatus (10,546) — — (10,546)Claimspaid,net (869) (1,489) (104) (2,462)Allowance,endofyear $ 33,204 $ — $ — $ 33,204
(inthousands)
(inthousands)
44
9.RetirementBenefitsStateEmployees’RetirementSystemTheAgencyparticipatesintheNewYorkStateandLocalEmployees’RetirementSystem(the“System”)whichisacostsharingmultipleemployerpublicemployeeretirementsystemofferingawiderangeofplansandbenefitswhicharerelatedtoyearsofserviceandfinalaveragesalary,andprovidefordeathanddisabilitybenefitsandforoptionalmethodsofbenefitpayments. Allbenefitsvestafter fiveyearsofcreditedservice. Obligationsofparticipatingemployersandemployees to contribute,andbenefitspayable toemployees,aregovernedby theSystemandsocialsecuritylaws.ThelawsprovidethatallparticipatingemployersintheSystemarejointlyandseverallyliableforanyactuarialunfundedamounts.TheAgencyisbilledannuallyforcontributions.Thefinancialreportofthesystemcanbeobtainedfrom:OfficeoftheStateComptrollerNewYorkStateandLocalRetirementSystem110StateStreetAlbany,NY12244Generally, all employees, except certain part‐time and temporary employees, participate in the System. TheSystemiscontributoryforthefirsttenyearsforemployeeswho joinedafterJuly1976attherateof3%oftheirsalary.Employeecontributionsaredeductedfromemployees’compensationforremittancetotheSystem.TheStateCourtofAppealshasruled that the1990enactmentof theprojectedunitcreditactuarialmethod forcalculatingretirementplanfundingwasunconstitutional.OnDecember6,1993,theStateannouncedareturntotheaggregatemethodforfundingtheplan.ThecoveredpayrollsforthefiscalyearsendedOctober31,2013,2012and2011were$7.4million,$7.4millionand$7.9million,respectively.Basedupontheactuariallydeterminedcontributionrequirements,theAgencycontributed100%oftheirrequiredportionintheamountsof$1.3millioninfiscal2013,$1.6millioninfiscal2012and$992thousandinfiscal2011.Agencyemployeeswererequiredtocontribute.98%ofthecurrentyear’scoveredpayroll($72thousandin2013,$53thousandin2012and$64thousandin2011).DeferredCompensationSome employees of the Agency have elected to participate in the State’s deferred compensation plan inaccordancewithInternalRevenueCodeSection457.Agencyemployeescontributed$431thousandduringfiscal2013($471thousandinfiscal2012).OtherPostemploymentBenefitsTheAgencyisaparticipatingemployerintheNewYorkStateHealthInsuranceProgram(“NYSHIP”),whichisadministeredby theStateofNewYorkasamultipleemployeragentdefinedbenefitplan. Under theplanasparticipatedinbytheAgency,eligibleretiredemployeesreceiveheathcarebenefitswithemployeespaying25%of dependent coverage costs and 10% of individual employee costs. The Agency’s plan complies with theNYSHIPbenefitprovisions.Inaddition,asprovidedforinCivilServiceLawSection167,theAgencyappliesthevalueofaccruedsickleaveofemployeeswhor*tireoutofservicetotheretireeʹsshareofcostsforhealthbenefits.
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9.RetirementBenefits(continued)TheAgencyprovidescertaingrouphealthcareandreimbursem*ntofMedicarePartBpremiumforretirees(andforeligibledependentsandsurvivorsofretirees).Contributions towardspartof thecostsofthesebenefitsarerequiredoftheretirees.Retireecontributionstowardsthecostofthebenefitarecalculateddependingonanumberoffactors,includinghiredate,yearsof service,and/or retirementdate.Anactuariallydeterminedvaluationof thesebenefitswasperformedbya consultant tocalculate the impactofGASBaccounting rulesapplicable to the retireemedicalbenefitsforretiredemployeesandtheireligibledependents.GASBStatementNo.45requiresthevaluationmustbeperformedat leastbiennially. ThemostrecentbiennialvaluationwasperformedwithavaluationdateofNovember1,2011andwasusedasabasisforthedeterminationofcostsfortheyearendedOctober31,2012and2013.ThebiennialvaluationwasperformedwithavaluationdateofNovember1,2009andwasusedasabasisfor fiscal year ended October 31, 2010 and fiscal year ended October 31, 2011. The total number of planparticipantsreceivingOPEBfromtheAgencyasofOctober31,2011was56.TheAgencyelectedtorecordtheentireamountofthenetOPEBobligationinthefiscalyearendedOctober31,2006.The Agency also elected not to fund the net OPEB obligation more rapidly than on a pay-as-you-go basis.ThenetOPEBobligationrelatingtopostemploymentbenefitsisintheapproximateamountsof$39.0millionand$34.7millionasofOctober31,2013and2012,respectively.UpontheadoptionofGASB45,theAgencyisnotrequiredbylaworcontractualagreementtoprovidefundingforotherpostemploymentbenefitsotherthanthepay‐as‐you‐goamountnecessarytoprovidecurrentbenefitstoretirees and eligible beneficiaries/dependents. During the fiscal years endedOctober 31, 2013 and 2012, theAgencypaid$554thousandand$473thousand,respectively.AnnualOPEBCostandNetOPEBObligation.TheAgency’sannualOPEBcost(expense)iscalculatedbasedontheannualrequiredcontributionoftheemployer(“ARC”),anamountthatwasactuariallydeterminedbyusingtheProjectedUnitCreditMethod (oneof theactuarialcostmethods inaccordancewith theparametersofGASBStatementNo.45).TheAgency isaparticipatingemployer inNYSHIPanddoesnot issueaseparatestand‐alone financialreportregardingotherpostemploymentbenefits.TheNYSHIPfinancialreportcanbeobtainedfrom:
NYSDepartmentofCivilServiceEmployeeBenefitsDivisionAlfredE.SmithOfficeBuildingAlbany,NY12239
46
2013 2012
AnnualRequiredContribution(ARC) $ 7,852 $ 7,343
InterestonnetOPEBObligation 1,213 1,063
AdjustmenttoARC (4,167) (3,652)
AnnualOPEBcost 4,898 4,754
Paymentsmade (554) (473)
IncreaseinnetOPEBobligation 4,344 4,281
NetOPEBobligation‐Beginningoffiscalyear 34,656 30,375NetOPEBobligation‐Endoffiscalyear $ 39,000 $ 34,656
Percentage
ofAnnual Net
Annual OPEBCost OPEBYearended OPEBCost Paid Obligation
10/31/2013 4,898$ 11.3% 39,000$
10/31/2012 4,754$ 9.9% 34,656$
10/31/2011 2,781$ 16.5% 30,375$
(inthousands)
(inthousands)
ActuarialMethodsandAssumptions:Actuarialvaluationsinvolveestimatesofthevalueofreportedamountsandassumptions about the probability of events far into the future, and the actuariallydetermined amounts aresubject to continual revisionasactual resultsare compared topastexpectationsandnewestimatesaremadeabout the future. TheOPEB‐specific actuarial assumptions used in theAgency’sNovember 1, 2011OPEBactuarial valuationswere the projected unit creditmethod as its actuarial costmethod, a 3.5% per annumdiscount rateand that retireecontributionsareassumed to increaseat the same ratesas incurredclaims.ThevaluationdatedasofNovember1,2009usedaperannumdiscountrateof4%.
9.RetirementBenefits(continued)
TheportionoftheActuarialPresentValueallocatedtoavaluationyeariscalledtheNormalCost.Calculationsarebasedonthetypesofbenefitsprovidedunderthetermsofthesubstantiveplanatthetimeofeachvaluationandonthepatternofsharingofcostsbetweentheemployerandplanmemberstothatpoint.Calculationsreflecta long‐termperspective. TheAgencyusesa leveldollaramountonanamortizationperiodoftenyearsonanopenbasis.ThefollowingtableshowstheelementsoftheAgency’sannualOPEBcostfortheyear,theamountactuallypaid,andchangesintheAgency’snetOPEBobligationtotheplanfortheyearsendedOctober31,2013and2012:TheAgency’sannualOPEBcost,thepercentageofannualOPEBcostcontributedtotheplan,andthenetOPEBobligationforthefiscalyearsendedOctober31,2013,2012and2011areasfollow:
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YearEnding Rate
2013 8.0
2014 7.0
2015 6.4 Age Male Female
2016 6.3 60 0.69% 0.59%
2021 6.5 65 1.149 0.981
2026 7.2 70 1.880 1.584
2031 6.9 75 3.240 2573
2036 6.5 80 5.763 4.247
2041 6.1 85 10.252 7.249
2046 5.8
2086 4.7
Thepremium rate isused for allnon‐Medicare eligible retireesanddependentswithbasicmedicalcoverage.Initialmonthlypremiumratesareshowninthefollowingtable: MonthlyRateEffectiveJuly1,2013 Eligible‐Medicare Single $612.26Family $1,423.942009MedicarePartBpremiumsareassumedtoincreasebyPartBtrendrates.Noretireeisassumedtohave income inexcessof the thresholdwhichwould result in increasingPartBpremiumsabove25%ofMedicarePartBcosts.HealthCareCost TrendRate (HCCTR): Coveredmedical expenses are assumed to increase by thefollowingpercentages:
9.RetirementBenefits(continued)
Therequiredscheduleoffundingprogressimmediatelyfollowingthenotestothefinancialstatementspresentsmulti‐yeartrendinformationaboutwhethertheactuarialvalueofplanassetsisincreasingordecreasingovertimerelativetotheactuarialaccruedliabilityforbenefits.
Mortality.Mortalityratesarethoserecommendedbytheactuary:
48
10.SyntheticFixedRateSwapsAsofOctober31,2013,theAgencyhasenteredintotwelvenegotiatedswapsaspartofitsriskmanagementprogram,servingto increase financial flexibilityandreduce interestcosts. Theseswapswereentered intowithsix financial institutions (theCounterparties)foracurrenttotalnotionalprincipalof$420,000,000.Thesesyntheticfixed‐rateswapscorrespondtotheStateofNewYorkMortgageAgencyHomeownerMortgageRevenue(“HMB”)variable‐ratebondserieslistedbelow.The fairvaluebalancesandnotionalamountsofderivative instrumentsoutstandingatOctober31,2013,classifiedby type,and the changes in fair value of such derivative instruments from the year then ended as reported in the 2012 financialstatementsareasfollows:
Changesinfairvalue FairvalueatOctober31,2013 Classification Amount Classification Amount NotionalCashflowhedge Deferredoutflow $19,313,024 Debt ($45,678,636) $420,000,000
Thefairvaluesoftheinterestrateswapswereestimatedusingthezero‐couponmethod.Thismethodcalculatesthefuturenetsettlementpayments required by the swap, assuming that the current forward rates implied by the yield curve correctlyanticipate future spot interest rates.Thesepaymentsare thendiscountedusing the spot rates impliedby thecurrentyieldcurveforhypotheticalzero‐couponbondsdueonthedateofeachfuturenetsettlementontheswaps.ObjectiveandTermsofHedgingDerivativeInstrumentsThe following tabledisplays termsof theAgency’shedgingderivative instrumentsoutstandingatOctober31,2013,alongwiththecreditratingoftheassociatedcounterparty.Theobjectiveofalloftheswapsenteredintowastohedgechangesincashflowsintheassociatedbondseries:
SyntheticFixedRateSwaps Terms
AssociatedBondSeries
NotionalAmount(000s)
EffectiveDate
MaturityDate
Fixedratepaid FairValue Counterparty
HMBSeries129*(1)HMBSeries132*HMBSeries135*HMBSeries139*HMBSeries142*(1)HMBSeries144*HMBSeries147*HMBSeries150*HMBSeries153*HMBSr.122/125*HMBSr.122/125*HMBSeries159**
$34,000$34,000$34,000$34,000$34,000$30,000$30,000$40,000$30,000$30,000$30,000$60,000
11/17/0503/09/0607/13/0609/23/0802/01/0706/07/0709/20/0712/14/0703/27/0808/14/0808/14/0810/30/08
10/01/3504/01/3704/01/1610/01/1604/01/1704/01/1710/01/1704/01/1804/01/1810/01/1610/01/1810/01/18
3.5870%3.4783%3.8570%2.9720%3.5650%3.6540%3.4250%3.2170%2.9900%3.0860%3.1760%3.5400%
($5,868,535)($5,816,887)($2,808,765)($2,385,250)($3,342,377)($3,041,585)($3,057,029)($3,981,390)($2,685,967)($2,206,408)($3,071,523)($7,412,920)
WellsFargoBankNAJPMorganChaseBankNATheBankofNewYorkMellonGoldmanSachsBankUSAWellsFargoBankNATheBankofNewYorkMellonJPMorganChaseBankNAGoldmanSachsBankUSAMerrillLynchDer.ProductsAGRoyalBankofCanadaRoyalBankofCanadaRoyalBankofCanada
*Variableratepaymentreceivedfromcounterpartiesis63%of1monthLIBORplus0.25%.**VariableratepaymentreceivedfromcounterpartiesisSIFMA.
49
10.SyntheticFixedRateSwaps(Continued)
(1) OnDecember4,2012,theCitibankNAswapsweretransferredtoWellsFargoBankNA(2) OnJuly31,2013,Series162witharemainingunamortizedbalanceof$13,090,000wasterminatedwith$175,900intermination
paymentmadetoBarclaysBankPLC.
OnApril1,2013,theSeries150and153swapswithnotionalamountsof$10,000,000and$20,000,000matured.
COUNTERPARTYRATINGS
CounterpartyName Moody’s/S&P/FitchTheBankofNewYorkMellon Aa1/AA‐/AA‐CitibankN.A. A3/A/AGoldmanSachsBankUSA* A2/A/A(GuarantorGoldmanSachsGroup) A3/A‐/AJPMorganChaseBankN.A. Aa3/A+/A+MerrillLynchDerivativeProductsAG Aa3/AAA/NRRoyalBankofCanada Aa3/AA‐/AA*InNovember2008,GoldmanSachsCapitalMarketsL.P.mergedintoGoldmanSachsBankUSARisksCreditrisk.TheAgencyisexposedtocreditriskonhedgingderivativeinstrumentsthatareinassetpositions.Tominimizeitsexposuretolossrelatedtocreditrisk,itistheAgency’spolicytorequirecounterpartycollateralpostingprovisionsinitsnon‐exchange‐traded hedging derivative instruments. These terms require full collateralization of the fair value of hedgingderivativeinstrumentsinassetpositions(netoftheeffectofapplicablenettingarrangements)shouldthecounterparty’screditratingnotbewithinthetwohighestinvestmentgradecategoriesbyatleastonenationallyrecognizedstatisticalratingagencyor the rating by any nationally recognized statistical rating agency fall below the three highest investment grade ratingcategories.TheAgencyhasneverbeenrequiredtoaccesscollateral.ItistheAgency’spolicytoenterintonettingarrangementswheneverithasenteredintomorethanonederivativeinstrumenttransactionwith a counterparty.Under the termsof these arrangements, shouldonepartybecome insolventorotherwisedefault on its obligations, close‐out netting provisions permit the non‐defaulting party to accelerate and terminate alloutstanding transactions andnet the transactions’ fairvalues so that a single sumwillbeowedby,orowed to, thenon‐defaultingparty.Interestraterisk.TheAgencyisexposedtointerestrateriskonitsinterestrateswaps.Onitspay‐fixed,receive‐variableinterestrateswap,asLIBORorSIFMAdecreases,theAgency’snetpaymentontheswapincreases.Basisrisk.TheAgencyisexposedtobasisriskonitspay‐fixedinterestrateswaphedgingderivativeinstrumentsbecausethevariable‐ratepaymentsreceivedbytheAgencyonthesehedgingderivativeinstrumentsarebasedonarateotherthaninterestratestheAgencypaysonitshedgedvariable‐ratedebt,whichisremarketedoneitherweeklyordailybasis.AsofOctober31,2013,theweighted‐averageinterestrateontheAgency’shedgedvariable‐ratedebtis0.086%,whiletheapplicable63%ofonemonthLIBORplus0.25%andSIFMAwere0.356%and0.08%,respectively.
Termination risk.TheAgencyor its counterpartymay terminate aderivative instrument if theotherparty fails toperformunder the termsof thecontract. Ifat the timeof termination,ahedgingderivative instrument is ina liabilityposition, theAgencywouldbeliabletothecounterpartyforapaymentequaltotheliability,subjecttonettingarrangements.Rolloverrisk.TheAgencyisexposedtorolloverriskonhedgingderivativeinstrumentsshouldaterminationeventoccurpriortothematurityofthehedgeddebt.
50
10.SyntheticFixedRateSwaps(Continued)Contingencies Five of theAgency’s counterparties have derivative instruments that include provisions that require theAgency to postcollateral in theevent itscreditrating fallsbelowcertain levels. Thecollateralposted is tobe in the formofU.S.Treasurysecuritiesintheamountofthefairvalueofthehedgingderivativeinaliabilitypositionnetoftheeffectofapplicablenettingarrangements. If the Agency does not post collateral, the hedging derivative instrument may be terminated by thecounterparty.Twoof the fivecounterparties requiringcollateralpostinghavecollateralpostingprovisions if theAgency’s rating falls toBaa1 or below or not rated byMoody’s or BBB+ or below or not rated by Standard& Poor’s. If the collateral postingrequirementswere triggered atOctober 31, 2013, theAgencywould be required topost $15,240,556 in collateral to thesecounterparties($22,224,547atOctober31,2012).Threeofthefivecounterpartiesrequiringcollateralpostinghavecollateralpostingthresholdsrelatingtovariousratinglevels.
• Thethresholdamount is$10,000,000 iftheAgency’sratingfallstoBaa1asratedbyMoody’sandBBB+asratedbyStandard and Poor’s.At these ratings, if collateral posting requirementswere triggered atOctober 31, 2013, theAgencywouldberequiredtopost$2,690,851incollateraltothesecounterparties.
• The thresholdamount is$5,000,000 if theAgency’s rating falls toBaa2as ratedbyMoody’sandBBBas ratedbyStandard and Poor’s.At these ratings, if collateral posting requirementswere triggered atOctober 31, 2013, theAgencywouldberequiredtopost$12,752,113incollateraltothesecounterparties.
• The thresholdamount is$1,000,000 if theAgency’s rating falls toBaa3as ratedbyMoody’sandBBB‐as ratedbyStandard and Poor’s.At these ratings, if collateral posting requirementswere triggered atOctober 31, 2013, theAgencywouldberequiredtopost$24,752,113incollateraltothesecounterparties.
• ThethresholdamountiszeroiftheAgency’sratingsfalltobelowBaa3asratedbyMoody’sandbelowBBB‐asratedbyStandardandPoor’s. Atthoseratings,ifcollateralpostingrequirementsweretriggeredatOctober31,2013,theAgencywouldberequiredtopost$27,752,113incollateraltothesecounterparties.
51
11.CommitmentsandContingencies
OfficeLeases
FiscalyearendingOctober31:2014 $ 2,6392015 2,7172016 2,7662017 2,8052018 2,844
Thereafter 3,366Totalminimumpaymentsrequired $ 17,137
Amount(inthousands)
TheAgencyisobligatedunderleasesforofficelocationsintheCityofNewYorkandBuffalo.TheAgency and theNewYork StateHousing FinanceAgency (“HFA”) entered into an operatingleaseforofficespacewhichcommencedinfiscalyear1994foratermof fifteenyears. The leasewasrenewedonJanuary1,2009foratermoftenyears.TheleasesobligatetheAgencytopayforescalationsinexcessoftheminimumannualrental(rangingfrom$2.4millionto$4.7million)basedonoperatingexpensesandrealestatetaxes.TheAgencybearsapproximately50%oftheminimumannualleasepaymentsunderthisleasewiththebalanceassumedbyHFA,withwhomtheAgencysharestheleasedspace.RentalexpenseforthefiscalyearsendedOctober31,2013and2012wereapproximately$2.5million.As ofOctober 31, 2013, the futureminimum leasepayment,which includes theAgency’s pro ratashareoftheannualpaymentfortheofficespaceleases,underthenon‐cancelableoperatingleasesareasfollows:
LitigationIn thecourseofbusiness, theAgency isparty tovariousadministrativeand legalproceedings.Although theultimateoutcomeoftheseactionscannotbeascertainedatthistimeandtheresultsoflegalproceedingscannotbepredictedwithcertainty,itistheopinionofmanagementthattheresolutionofthesematterswillnothaveamaterialadverseeffectonthefinancialposition,changesinfinancialpositionorcashflowsoftheStateofNewYorkMortgageAgencyassetforthintheFinancialStatements.
RiskManagementTheAgencyissubjecttonormalrisksassociatedwithitsoperations,includingpropertydamage,generalliabilityand crime. Such risks aremanaged through the purchase of commercial insurance. There have been nodecreasesincoverageinthelastthreeyears.
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12.TransferstoNewYorkStateanditsAgenciesTheNewYorkStateFiscalYear2014enactedExecutiveBudgetrequirestheAgencytomakecertaintransfersofmoney from the MIFʹs Project Pool Insurance Account totaling $136 million. Each transfer requires adetermination by theAgency, that, at the time of such transfer, the reserves remaining in the Project PoolInsuranceAccountaresufficienttoattainandmaintainthecreditratingrequiredtoaccomplishthepurposesoftheProjectPoolAccount.TheMIF transferred$32.5millionduring thecurrent fiscalyearwith the remaining$103.5millionreportsasapayabletoNewYorkStateatOctober31,2014.SimilartransfershavebeenmadebytheAgencyaspartof theStateʹs2013and2009FiscalYearsenactedExecutiveBudgets in theamountof$100millioneach.Statebudget legislation in futureyearsmayprovide for transfers from theProjectPool InsuranceAccountorotheraccounts intheMIF. TheAgencymakesnorepresentationregardingwhetheranysuchtransfers,ortheamountsthereof,willbeenacted.
13.NetPosition TheAgency’sNetPosition represents the excessof assetsanddeferredoutflowsover liabilities anddeferredinflowsand largely consistsofmortgage loansand investments. TheAgency’snetposition iscategorizedasfollows: a.RestrictedforBondObligations Such amount represents earned commitment fees and net investment earnings accumulated to date. Theseamountsareinvestedinmortgagereceivablesandreserveinvestments.Therevenuesfromtheinvestmentsarenecessary tomeetscheduledpaymentsof interestandprincipalonbonds,amortizationofbond issuancecostsand,ifavailable,usedtoredeembondsinadvanceofscheduledmaturitiesasprovidedunderthevariousbondresolutions.
b.RestrictedforInsuranceRequirements AsofOctober31,2013and2012,theMortgageInsuranceFund’snetpositionrepresenttherequiredreserveforpoliciesinforceof$3.00billionand$2.80billion,respectively.Includedwithinpoliciesinforcearesinglefamilymortgageprimaryandpoolpolicies(totalaggregatelosslimit)totaling$498millionand$489millionin2013and2012,respectively.Commitmentsoutstandingasoffiscalyearsended2012and2013were$898millionand$929million, respectively. The Agency provided $6.0 million and $9.0 million during fiscal 2013 and 2012respectively,forpotentialclaimsonmortgagesinsuredbytheMortgageInsuranceFund.TheAgencyrecordedrecoveryincomeintheamountofapproximately$3.3millionduringfiscal2013and$3.5millionduringfiscal2012asaresultofanUlsterCountyIndustrialDevelopmentAgencymortgagerelatingtoanursinghomeinKingston,NewYork.ThemortgagewasassignedtotheAgencyasaresultofaclaimpaidbytheMortgageInsuranceFundinJuly2003.TheAgencyremittedtotheStateexcesstaxcollectionsduringfiscal2013intheamountof$28.0million.Therewasnoexcess taxcollectionremittedduring fiscal2012.TheAgencyalsomade transfers to theStatefrom theprojectinsuranceaccountof$32.5millionand$100.0millionforfiscalyears2013and2012respectively.
*******
53
Required Supplementary
Information
111
State of New York Mortgage Agency(a component unit of the State of New York)
REQUIRED SUPPLEMENTARY INFORMATIONSCHEDULE OF FUNDING PROGRESS - POSTRETIREMENT HEALTHCARE PLANOctober 31, 2013 and 2012(in thousands)
UnfundedActuarial Actuarial Actuarial RatioofUAAL
Valuation Valueof Accrued Accrued Funded Covered toCoveredDate Assets Liability(AAL) Liability(UAAL) Ratio Payroll Payroll
(A) (B) (C=B‐A) (A/C) (D) (C/D)
November1,2011 — $42,682 $42,682 — $7,382 578%
November1,2009 — $25,461 $25,461 — $8,630 295%
November1,2007 — $18,005 $18,005 — $8,500 212%
54
Supplementary Section
4
State of New York Mortgage Agency(A Component Unit of the State of New York)
Schedules of Net PositionOctober 31, 2013with comparative totals for 2012
AssetsCurrentassets:Cash‐demanddepositsrestricted $ — $ 1,636 $ (19)
Cash‐demanddepositsunrestricted 2,131 — —Cash‐custodiandeposits — 2,294 1,314Investmentsunrestricted 22,664 — —Investmentsrestricted — 258,400 104,169Totalcashandinvestments 24,795 262,330 105,464Mortgageloansreceivable — 95,570 75,174Accruedinterestreceivable:Mortgageandstudentloans — 15,829 3,808Investments 60 1,450 706Other — 6,112 943Totalcurrentassets 24,855 381,291 186,095Non‐currentAssets:Investmentsrestricted — 92,325 44,879Mortgageloansreceivable — 1,940,146 748,188Studentloanreceivable — — —Unamortizedcostofissuance — — —Totalnon‐currentassets — 2,032,471 793,067Totalassets 24,855 2,413,762 979,162
DeferredoutflowsofresourcesAccumulateddecreaseinfairvalueofhedgingderivatives — 38,979 —Deferredlossonrefunding — 6,118 —Totaldeferredoutflowsofresources — 45,097 —
LiabilitiesCurrentliabilities:Bondspayable,net — 88,915 21,575Interestpayable — 4,616 2,450Allowanceforanticipatedclaims — — —Unearnedincome,accountspayableandotherliabilities 4,824 9,697 1,520AmountsduetoNewYorkStateanditsAgencies — — —Interfundpayables (423) (524) 227Totalcurrentliabilities 4,401 102,704 25,772Non‐currentLiabilities:Bondspayable,net — 1,912,947 791,202Derivativeinstruments‐interestrateswaps — 45,679 —Postemploymentretirementbenefitspayable 39,000 — —Totalnon‐currentliabilities 39,000 1,958,626 791,202Totalliabilities 43,401 2,061,330 816,974
NetpositionRestrictedforbondobligations — 397,529 162,188Restrictedforinsurancerequirements — — —Unrestricted(deficit) (18,546) — —Totalnetposition $ (18,546) $ 397,529 $ 162,188
*RestatedforGASB65implementation‐pleaseseenote3
GeneralOperating
HomeownerMortgageRevenue
MortgageRevenue
(inthousands)Fund
55
$ — $ 1,617 $ 965 $ 317 $ 2,899 $ 14,551— 2,131 — — 2,131 1,785— 3,608 — — 3,608 2,086— 22,664 — — 22,664 17,348— 362,569 15,916 461,075 839,560 1,076,861— 392,589 16,881 461,392 870,862 1,112,631241 170,985 — — 170,985 166,965
58 19,695 816 — 20,511 17,930— 2,216 — 7,008 9,224 10,462122 7,177 — — 7,177 4,933421 592,662 17,697 468,400 1,078,759 1,312,921
— 137,204 — 1,256,718 1,393,922 1,193,8922,881 2,691,215 — — 2,691,215 2,784,901— — 11,678 — 11,678 12,552— — — — — —
2,881 2,828,419 11,678 1,256,718 4,096,815 3,991,3453,302 3,421,081 29,375 1,725,118 5,175,574 5,304,266
— 38,979 — — 38,979 58,292— 6,118 — — 6,118 7,412— 45,097 — — 45,097 65,704
— 110,490 445 — 110,935 217,635— 7,066 308 — 7,374 8,374— — — 22,653 22,653 33,204
68 16,109 35 33,409 49,553 30,113— — — 103,534 103,534 —— (720) 24 696 — —68 132,945 812 160,292 294,049 289,326
— 2,704,149 12,938 — 2,717,087 2,819,961— 45,679 — — 45,679 64,992— 39,000 — — 39,000 34,656— 2,788,828 12,938 — 2,801,766 2,919,60968 2,921,773 13,750 160,292 3,095,815 3,208,935
3,234 562,951 15,625 — 578,576 572,382— — — 1,564,826 1,564,826 1,606,967— (18,546) — — (18,546) (18,314)
$ 3,234 $ 544,405 $ 15,625 $ 1,564,826 $ 2,124,856 $ 2,161,035
TotalAllFunds
SupplementalScheduleI
HomeownershipMortgageInsurance
StudentLoan
SingleFamily
(inthousands)Fund 2013 2012*Program Total Program
October31,Programs
56
State of New York Mortgage Agency(A Component Unit of the State of New York)
Schedules of Revenues, Expenses and Changes in Net PositionFiscal Year Ended October 31, 2013with comparative totals for 2012
OperatingrevenuesInterestearnedonloans $ — $ 107,889 $ 38,487Recoveries — — —InvestmentIncome 6 5,201 1,813Netchangeinfairmarketvalueofinvestments (1) (3,491) (1,350)Commitmentfees,insurancepremiumsandapplicationfeesearned — — —Otherincome 382 309 —Totaloperatingrevenues 387 109,908 38,950
OperatingexpensesInterestandamortizationofdiscountondebt — 76,760 29,452Bondissuancecosts — 3,512 2,106Postemploymentretirementbenefitsexpense 4,344 — —Generalexpenses 9,977 5,015 169OverheadassessmentbyStateofNewYork 3,417 — —Poolinsurance — 221 102Provisionforestimatedclaims — — —Expendituresrelatedtofederalandstategrants 909 — —Other 943 4,512 3,346Totaloperatingexpenses 19,590 90,020 35,175
Operating(loss)income $ (19,203) $ 19,888 $ 3,775
Non‐operating(expenses)revenuesMortgageinsurancereservesretained — — —Federalgrants 909 — —TransferstoNewYorkStateanditsAgencies — — —Interfundtransfers 18,062 (17,445) —Totalnon‐operatingrevenues(expenses) 18,971 (17,445) —
(Decrease)increaseinnetposition (232) 2,443 3,775
Netpositon,beginningoffiscalyear (18,314) 395,086 158,413Totalnetposition,endoffiscalyear $ (18,546) $ 397,529 $ 162,188
*RestatedforGASB65implementation‐pleaseseenote3
GeneralOperating
HomeownerMortgageRevenue
MortgageRevenue
(inthousands)Fund
57
$ 248 $ 146,624 $ 1,011 $ — $ 147,635 $ 162,551— — — 11,185 11,185 10,5461 7,021 16 14,776 21,813 30,548
— (4,842) — (23,932) (28,774) (7,380)
— — — 14,129 14,129 13,171— 691 2 — 693 551249 149,494 1,029 16,158 166,681 209,987
— 106,212 546 — 106,758 124,918— 5,618 — — 5,618 1,893— 4,344 — — 4,344 4,2811 15,162 134 4,112 19,408 20,577
— 3,417 — 1,139 4,556 4,4105 328 — 180 508 1,031
— — — 6,181 6,181 8,628— 909 — — 909 828(1) 8,800 — 3 8,803 7,2255 144,790 680 11,615 157,085 173,791
$ 244 $ 4,704 $ 349 $ 4,543 $ 9,596 $ 36,196
— — — 89,268 89,268 87,256— 909 — — 909 828— — — (135,952) (135,952) (100,000)
(617) — — — — —(617) 909 — (46,684) (45,775) (11,916)
(373) 5,613 349 (42,141) (36,179) 24,280
3,607 538,792 15,276 1,606,967 2,161,035 2,136,755$ 3,234 $ 544,405 $ 15,625 $ 1,564,826 $ 2,124,856 $ 2,161,035
TotalAllFunds
SupplementalScheduleII
HomeownershipMortgageInsurance
StudentLoan
SingleFamily
(inthousands)Fund 2013 2012*Program Total Program
FiscalyearendedOctober31,Programs
58
State of New York Mortgage Agency(A Component Unit of the State of New York)
Schedules of Cash FlowsFiscal Year Ended October 31, 2013 with comparativetotals for 2012
CashflowsfromoperatingactivitiesInterestreceivedonloans $ — $ 108,490 $ 38,538Principalpaymentonmortgages — 295,979 81,319Purchaseofmortgageloans — (192,059) (96,149)Commitmentfees,insurancepremiumandapplicationfeesearned 1,353 — —Operatingexpenses (23,108) — —Expendituresrelatedtofederalgrants (909) — —Transfers 18,062 (17,445) —Other 9,408 (17,082) (6,053)Netcashprovidedby(usedin)operatingactivities 4,806 177,883 17,655
Cashflowsfromnon‐capitalfinancingactivities Interestpaidonbonds — (77,561) (29,594)Mortgagerecordingsurtaxreceipts — — —PaymentstoNewYorkState — — —Federalgrants 909 — —Bondproceeds — 225,900 198,825Retirementandredemptionofbonds — (447,520) (185,980)Netcashprovidedby(usedin)non‐capitalfinancingactivities 909 (299,181) (16,749)
CashflowsfrominvestingactivitiesEarningsoninvestments (14) 8,971 3,775Proceedsfromthesaleormaturitiesofinvestments 86,359 2,837,635 814,010Purchaseofinvestments (91,714) (2,727,904) (823,231)Netcash(usedin)providedbyinvestingactivities (5,369) 118,702 (5,446)Netincrease(decrease)incash 346 (2,596) (4,540)Cash,beginningoffiscalyear 1,785 6,526 5,835Cash,endoffiscalyear $ 2,131 $ 3,930 $ 1,295
Reconciliationofoperatingrevenues(expenses)tonetcash(usedin)providedbyoperatingactivities:Netoperatingrevenues(expenses) $ (19,203) $ 19,888 $ 3,775Adjustmenttoreconcileoperatingincometonetcashprovided(usedin)byoperatingactivities:Earningsoninvestment (6) (5,201) (1,813)Interestpaymentsandamortization — 76,760 29,452Unrealizedgain(loss)oninvestment 1 3,491 1,350Provisonforclaims — — —Other 1 1,218 (309) Transfers 18,062 (17,445) —
ChangesinassetsandliabilitiesMortgageloansandotherloans,net — 103,920 (14,830)Interest,feesandotherreceivables — (5,387) (545) Studentloans — — —Allowanceforanticipatedclaims — — —Interfundpayables 2,726 (1,611) 122 Unearnedincome,accountspayableandother (1,119) 2,250 453 Postemploymentretirementbenefitspayable 4,344 — —Netcashprovidedby(usedin)operatingactivities $ 4,806 $ 177,883 $ 17,655
Non‐cashinvestingactivities(Decrease)increaseinfairvalueofinvestments $ (1) $ (7,805) $ (2,613)
*RestatedforGASB65implementation‐pleaseseenote3
MortgageRevenue
(inthousands)
GeneralOperatingFund
HomeownerMortgageRevenue
59
SupplementalScheduleIII
$ 251 $ 147,279 $ 612 $ — $ 147,891 $ 162,644486 377,784 1,110 — 378,894 381,786— (288,208) — — (288,208) (131,729)
— 1,353 — 20,795 22,148 16,736(6) (23,114) (414) — (23,528) (21,885)— (909) — — (909) (828)
(617) — — — — —(1,272) (14,999) (68) (15,156) (30,223) (16,650)(1,158) 199,186 1,240 5,639 206,065 390,074
— (107,155) (316) — (107,471) (127,758)— — — 134,104 134,104 92,521— — — (60,466) (60,466) (100,000)— 909 — — 909 828 — 424,725 — — 424,725 646,005— (633,500) (385) — (633,885) (823,160)
— (315,021) (701) 73,638 (242,084) (311,564)
8 12,740 23 24,180 36,943 52,5285,975 3,743,979 58,103 1,621,909 5,423,991 4,281,787(4,843) (3,647,692) (58,941) (1,728,066) (5,434,699) (4,405,476)1,140 109,027 (815) (81,977) 26,235 (71,161)(18) (6,808) (276) (2,700) (9,784) 7,34918 14,164 1,241 3,017 18,422 11,073
$ — $ 7,356 $ 965 $ 317 $ 8,638 $ 18,422
$ 244 $ 4,704 $ 349 $ 4,543 $ 9,596 $ 36,196
(1) (7,021) (16) (14,776) (21,813) (30,548)— 106,212 546 — 106,758 124,918— 4,842 — 23,932 28,774 7,380— — — 6,181 6,181 8,628— 910 (315) (5,097) (4,502) (13,039)
(617) — — — — —
575 89,665 — — 89,665 256,840(102) (6,034) (163) 1,373 (4,824) (2,751)— — 874 — 874 (6,329)— — — (10,552) (10,552) (4,380)
(1,272) (35) — 35 — —15 1,599 (35) — 1,564 8,878— 4,344 — — 4,344 4,281
$ (1,158) $ 199,186 $ 1,240 $ 5,639 $ 206,065 $ 390,074
$ — $ (10,419) $ 2 $ (23,932) $ (34,349) $ (7,380)
SingleFamilyPrograms Loan
ProgramHomeownership
Program Total(inthousands)
MortgageInsuranceFund 2013 2012*
FiscalyearendedOctober31,TotalAllFundsStudent
60
A member firm of Ernst & Young Global Limited
Ernst & Young LLP 5 Times Square New York, NY 10036-6530
Tel: +1 212 773 3000 Fax: +1 212 773 6350 ey.com
1401-1186403
Report of Independent Auditors on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
Management and Directors of the Board
State of New York Mortgage Agency
New York, New York
We have audited, in accordance with auditing standards generally accepted in the United States
and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the State of
New York (the “Agency”), a component unit of the State of New York, which comprise the
statement of net position as of October 31, 2013, and the related statements of revenues and
expenses and changes in net position, and cash flows for the year then ended, and the related
notes to the financial statements, and have issued our report thereon dated January 29, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Agency’s
internal control over financial reporting (internal control) to determine the audit procedures that
are appropriate in the circ*mstances for the purpose of expressing our opinion on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity’s financial statements will not be prevented,
or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
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1401-1186403
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Agency’s financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts and grant agreements, noncompliance with which could have a direct
and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the result of that testing, and not to provide an opinion on the entity’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity’s internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.
January 29, 2014
A member firm of Ernst & Young Global Limited
62