Financing small co-ops: hopeless??
Anyone know of any lenders who will finance units in small co-ops? We own an apartment in a 4-unit co-op and are interested in refinancing–but it seems to be practically impossible these days to find a lender who will deal with this kind of building (include the lender who holds our current mortgage). Yesterday I had a mortgage broker tell me that only Citibank will do it, but only for up to 30% of the units in a building–and since someone else in our building already has a Citibank loan, we’re out of luck there. And please spare me the preachy “that’s why *I* would never buy in a co-op” speeches. We’ve been in this place for years and are very happy with it (including the co-operative ownership with our neighbors). And thankfully we don’t *have* to refinance (or sell). But I’m just baffled that there could truly be NO options for what must be a reasonably sized chunk of homes in NYC… Any thoughts? Is this something that’s likely to loosen up with economic and/or market changes in the future? (Or should we just count on having to find a cash buyer whenever we do want to sell?)
Brownstonerlogin
in Mortgage 13 years and 6 months ago
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7 replies
vthatcher | 13 years and 6 months ago
Im a broker and to be honest, if I took the loan back through the wholesale channel we could get it done. Your loan is the Wellsfargo exposure in the building and they would do it again. Dealing with a broker will take the aggravation out of the equation. Vanessa Thatcher ATLANTIC HOME CAPITAL Tel: 631-687-3510 x106 EFax: 631-918-5222 Cell: 631-672-4113
Brownstonerlogin | 13 years and 6 months ago
Thanks everyone for your thoughtful and helpful responses. I have no problem stating that my current lender is Wells Fargo, and I would highly highly NOT recommend them to anyone (the broker I mentioned above–a large Manhattan one–called them “a joke”). Part of me actually wants to refinance *just* to take my business away from WF. But easier said than done. Sigh. I actually found some good recommendations for Universal in older forum posts here, so I might give them a call. But yeah, I am not handing over any money to anyone until I have stronger reassurance that the process will actually work. Thanks again all.
brokelin | 13 years and 6 months ago
what your current lender did to you sounds like outright fraud to me. please identify the bank. although you got some good suggestions above, they may not be useful, as four units is very different from eight to lenders, as you undoubtedly know. you might want consider working with a mortgage broker to try to avoid being defrauded again by another bank. perhaps you can limit your initial outlay, as they get compensated partly from the bank that makes the mortgage. I would think they would at least have a good idea of what banks would be most likely to lend to you, and not be in the mode of generating fees from clients they have no intent of getting loans for. I think many banks are now doing what your lender did to you. a mortgage broker working in between you and the bank can work to your advantage. I recommend you go to the largest mortgage brokers in Manhattan, or ask a real estate agent which of those large ones gets loans for four unit coops. real estate agents who sell units in four unit coops would also be a good source of information on what banks are making these loans now. some banks must be, as there are some sales in buildings with four units, and while many are all cash deals, they likely are not all. I would avoid the small Brooklyn based mortgage brokers. Larger ones have contacts with many more banks. when I was seeking a loan for a four unit coop a number of years ago, I found Universal to be quite useless…they had connections with fewer banks, and could only offer me an arm, no thirty year fixed at all. Large Manhattan broker, unfortunately not around now or I would recommend them, got me a thirty year fixed, with a low interest rate. My loan was from a portfolio lender bank, meaning they kept the loan on their books and so were not trying to underwrite to some other institution.s standards to sell it to them immediatelty or ever. some banks recognized that these are very secure loans, evidenced by the fact that there are few foreclosures in coops. perhaps there are some of these lenders still around. my impression is that small mortgage brokers make the loans that make them the most money. and those small ones with few contacts do not know what all the banks are doing. call other, larger mortgage brokers…there may be some with other contacts besides citi that making these loans now.
elbow | 13 years and 6 months ago
I’m the treasurer of an 8 unit self managed co-op. Here are the banks that have provided share financing in the recent past: Wells Fargo – 7/2011 – Talking to this guy from North Carolina was like pulling teeth but it eventually worked. HSBC 1/2010 – Simple board paperwork. Seemed fairly effortless. Emigrant – 11/2008. Also pretty painless but given the date, maybe stricter rules had yet to come.
maggie75 | 13 years and 6 months ago
I ended up with Chase because they got me a lower rate – my employer has a relationship with them which I think is a lot of it, but they may be worth a call. I was also working with a broker who had found Ridgewood. I was told by both people at Chase and by multiple brokers that the issue was not with me or my income or assets, it was the small building and the number of investment properties (which thankfully has gone down to 1/4 since I bought). If you google Universal Mortgage in Park Slope they have a page on loans for small coops that touts their alleged success (google “universal mortgage + 3 unit coop” and you’ll find it). I’ve never worked with them but maybe someone else can chime in.
Brownstonerlogin | 13 years and 6 months ago
Yeah, I think it’s easier for condos because your financials aren’t as tied to the other units/owners as they are in a co-op. About a year and a half ago we went through the whole refinance process with our current lender–who initially said it would be a piece of cake–and after 6 months, reams of paperwork, and $700 in (non-refunded) fees they rejected us on the grounds that they don’t do small co-ops like ours (presumably “anymore,” since they did the first time around…). Of couse they knew this about our building from day one of the refinance, so it was particularly infuriating. Thanks for your suggestion, I will try Ridgewood (is that who you ended up with?)…
maggie75 | 13 years and 6 months ago
This may be a repost because I’m not sure my answer went through: I’m not sure if it is the same for coops, but I own in a four unit condo (that was half owner occupied) and had to get a mortgage last year to purchase my unit. It was difficult but not impossible. Try Ridgewood Savings Bank or maybe one of the other smaller banks. Why won’t your current lender do it?