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April 17, 2009
mortgage for a 4 unit co-op?
I just heard from a friend who wants to sell her co-op that Fannie Mae is no longer backing mortgages for units in co-ops of 4 units or less. So she can't sell unless she gets an all cash buyer? Can this be right? She is freaking out - anyone understand this or know more?
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She should have freaked out when she over over payed for it when she bought it. Don't you realize banks are not going to finace homes that are "priced" at 200-300 percent their true value but it is the truth and the truth shale set you free!
Posted by: hannible at April 17, 2009 2:14 PM
Dude, she bought it 8 years ago. That's not my question. My question is, if NO BANK will mortgage a 4 unit co-op, no matter WHAT the price. It isn't even on the market yet, but seeing as how she has 3 kids and it is a 1 BR, she was thinking about selling.
Posted by: WTbound at April 17, 2009 4:20 PM
hi,
that is just one bank- who knows who will buy the apt and which bank they will come from.
I am sure she will not have to find an all cash buyer.
Posted by: brooklynjennie at April 17, 2009 5:16 PM
actually, we are currently in that position. We are a unit in a 4 unit building, on the market, and will probably take it off soon if the credit market doesn't open up.
What your friend heard is basically true. Fannie and Freddie are not backing 4 unit coops right now. According to my agent, and a couple of brokers, there are one or two banks willing to work with 4 unit buildings right now, and they both require a 25% down payment, at least.
My recommendation would be to talk to a mortgage broker or two to get a better lay of the land. If she is in Brooklyn, try Universal Mortgage in PArk Slope. Manhattan Mortgage is useful as well. All said though, it does not look good.
Posted by: wishinone at April 17, 2009 6:44 PM
take it off the market if this is true. a huge down payment requirement or all-cash deal will mean a huge price cut. The buyer will know he/she has all the leverage and will be demanding a massive discount (ie 30% or more).
Posted by: more4less at April 17, 2009 11:08 PM
"The buyer will know he/she has all the leverage and will be demanding a massive discount (ie 30% or more)."
OK, why does this mean take it off the market? Alternatively you can just accept that the asset you are selling just isn't worth what you thought it was. If you postpone some sort of life plans now because you think what is happening in the real estate market is temporary you could end up right back in the same position in a few years and in the meantime you may have put some part of your life on hold. The market is what it is. Maybe 4-unit coops just aren't worth as much as larger coops. I sure don't think they are (see thread from earlier this week).
If you are selling, it's because there is some reason (presumably unrelated to real estate market prices) why you want to move. A classic mistake is to think that a bursting bubble is temporary and wait until things "come back to normal." You missed the market. Accept it, sell, and move on.
Posted by: lechacal at April 18, 2009 9:43 AM
And of course you should ask Adam Dahill (resident mortgage broker who seems knowledgeable and is always responsive to questions on this site) for his views.
Posted by: lechacal at April 18, 2009 9:45 AM
Wow, this is amazing. If true, could affect the value of many of the brownstones that have been chopped up into apartments in places such as Park Slope.
Can the coop reorganize as a condo?
Posted by: mopar at April 18, 2009 11:58 AM
Many coops always required at least 20% down. And many buyers expect to pay at least 20% down. I wouldnt worry about mortgage issues. A qualified buyer will get one. I would worry about the market, and whther your place is priced well. If its a nice place, it will sell at the right price toa well-qualified buyer. Unfortunately people were buying anything over the past 5-6 years just because they didnt want to miss the market and anyone could get in. Todays buyer is more careful to buy quality and at the right price. Its incredible to see some of the crap on the market these days - living rooms no more than 10 feet wide, or master bedrooms 8 feet wide, weird layouts in walkups 4 flights up, etc. Those apartments will never get financed.
Posted by: saminthehood at April 20, 2009 1:40 PM
Prices are coming down and more to come. The issue here it this coop unit is going require an add'l haircut (beyond the down mkt) to account for huge down payment or all-cash requirement by banks. I'm assuming this bank mortgage requirement might NOT be permanent so good idea to consider waiting it out. Most importantly, I bet good $$$ this seller is NOT willing to drop prices by 30% or more to get it sold so why waste time for everyone (ie buyers, agent, & seller).
Posted by: more4less at April 20, 2009 1:52 PM
Just got back from vacation everyone and starting to get past the mountain of emails and voice mails.
Fannie Mae's specific policy pertaining to smaller coops are as follows.
Fannie Mae will only do coops if they have 5 or more units unless the Coop is within the 5 boroughs of NYC.
So YES, you can get financing for a 4 unit Coop through Fannie Mae if you are in Manhattan, Brooklyn, Queens, Staten Island and the Bronx.
No 4 unit coops in Long Island, Westchester, Rockland, Putnam, Jersey, CT, and Florida. I really havent seen coops outside those places anyway.
I'm back in town for any mortgage questions.
-Adam
adahill@approvedfunding.com
Posted by: Adam Dahill at April 21, 2009 4:45 PM
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