(b) Notwithstanding the provisions of paragraph (a) of this subdivision or of any general, special or local law, for the purpose of completing the financing of project cost, in the event that a municipality has made or contracted to make a loan to a company or to a public benefit corporation to provide moneys to finance the project cost of a project (1) the construction of which commenced prior to December first, nineteen hundred seventy-five, (2) for which a temporary or permanent certificate of occupancy was not issued prior to January first, nineteen hundred seventy-three, and (3) which is assisted by a contract with the secretary of housing and urban development of the United States pursuant to section two hundred thirty-six of the national housing act, as amended, covering all dwelling units therein, one or more banking organizations as defined in paragraph (a) of this subdivision, foundations, labor unions, credit unions, employers' associations, veterans' organizations, colleges, universities, educational institutions, child care institutions, hospitals, medical research institutes, insurance companies, trustees or fiduciaries as defined in paragraph (a) of this subdivision, trustees of pension and retirement funds and systems, corporations, partnerships, individuals, or other entities or any combination of the foregoing shall have the power to participate in such loan or make or participate in a new loan secured by a bond or note and a single participating mortgage, or by separate bonds or notes and separate mortgages, or to invest, singly or jointly, with the municipality in a bond or note and single participating mortgage or in separate bonds or notes and mortgages, upon such terms and conditions as may be approved by the supervising agency, including but not limited to provisions providing that (i) priority may be given to the payment of the principal of and interest on that portion of the mortgage indebtedness attributable to participation in a loan or an investment made by one or more of such entities or organizations, (ii) the interest of the municipality created as a result of making a mortgage loan may be subordinated to the interest that one or more of such organizations or entities may have upon such participation or investment, (iii) the interest of each upon such participation or investment need not be of equal priority as to lien, nor be equal as to interest rate, time or rate of amortization of principal or time of payment of interest, or otherwise, provided, however, that the aggregate amount of the loan or loans or investment made by one or more of such organizations or entities shall not exceed thirty per centum of total project cost and, further provided that the aggregate amount of the loan or loans to a company does not exceed such amount as is authorized pursuant to paragraph (a) of this subdivision. All or part of the proceeds of such participation or investment pursuant to this paragraph (b) may be applied to reduce or prepay the loan made by the municipality. The provisions of subdivisions one and five of section twenty-six of this article shall not apply to such participation in a loan or investment pursuant to this paragraph (b) if undertaken in connection with a project theretofore approved pursuant to said section twenty-six. Notwithstanding the provisions of this article or of any general, special or local law, in the event that a municipality has made a loan pursuant to this article prior to any participation pursuant to this paragraph, the supervising agency shall have the power, upon the mortgagor's consent, to modify the terms and conditions of the original bond or bonds or note or notes and mortgage and any other documents executed in connection with such initial loan, as the supervising agency may deem necessary or desirable, to provide for such participation, including but not limited to modification of the rate and time of payment of the interest on the initial loan or rate of amortization of principal thereof, and provision for the additional borrowing cost, if any, with respect to that portion of the mortgage indebtedness attributable to such participation, provided, that except to the extent of any increase in the maximum principal amount of the original mortgage loan, with regard to a company that has obtained a temporary or permanent certificate of occupancy for part or all of a project financed by a loan pursuant to this article before such participation in a loan or investment is made, the sum of the payments of interest and principal on the mortgage loan or loans which the company is obligated to make in any year as a result of such modification and participation in a loan or investment made pursuant to this paragraph, shall not exceed the sum of the payments of interest and principal that such company would have been obligated to make in such year under the original mortgage loan agreement if the project had been fully financed under the original mortgage loan agreement by the municipality at an interest rate equal to the maximum rate per annum prescribed by the superintendent of financial services pursuant to section fourteen-a of the banking law as of December nineteenth, nineteen hundred seventy-five, or such higher rate of interest as the secretary of housing and urban development of the United States shall approve pursuant to an agreement to make interest reduction payments pursuant to section two hundred thirty-six of the national housing act, as amended, with respect to such project and that the rental or carrying charges in such projects shall not be increased as a result of such participation in a loan or investment and further provided, that the company shall not seek or accept from the municipality any subsidy, direct or indirect, excluding existing tax exemption, to offset any increased borrowing costs, if any.

(c) Where the state or a municipality shall join with one or more organizations of the kind hereinabove mentioned, in making a loan secured by a single participating mortgage or by separate mortgages, the state or a municipality is authorized, through the commissioner of housing, or the supervising agency, as the case may be, to make provision, either in the mortgage or mortgages or by separate agreement, for the performance of such services as are generally performed by a banking institution or insurance company which itself owns and holds a mortgage or by a trustee under a trust mortgage. The commissioner and the supervising agency are hereby authorized to act as trustee or to consent to the appointment of a banking institution to act in such capacity. Any agreement made by the commissioner under this provision shall be subject to the approval by the state comptroller and the attorney general as to form.

(d) In connection with any participation in a loan or investment pursuant to paragraph (b) of this subdivision the municipality shall have the power to assign or pledge, in whole or in part, to one or more of the organizations or entities participating in such loan its right, title and interest in and to any mortgage held pursuant to this article and any contract or arrangement for the payment of subsidy with respect to such loan and the right to receive and apply to repayment of such loan and the interest thereon any payments made under such mortgage or under such contract or arrangement. 2. Notwithstanding any other provision of law, any banking institution or insurance company or a group thereof operating a company, or owning all of the bonds of a company may exercise all the powers conferred by this section and may enter into contracts contemplated by this article and agree with the commissioner not to sell, assign, or otherwise transfer such project or bonds or bond and mortgage or interest therein of such company provided for pursuant to this article without the consent of the commissioner.