Financing in 10003>Question Details

Veena Prakash, Real Estate Pro in New York, NY

Can anyone tell me what the problem is in Battery Park City, Manhattan? Does it mean no banks are lending ? Are any of the bldgs exempt?

Asked by Veena Prakash, New York, NY Wed Jan 19, 2011

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You need a portfolio lender that will look beyond the land lease situation. That's me. :)

Chinatrust will do 40% down, 3/1 ARM @4.5%, and aren't strict on those land lease issues as we don't resell our loans to fannie mae and basically make up our own guidelines to whatever we want.
0 votes Thank Flag Link Wed Jan 26, 2011
Thank you all, I greatly appreciate your input and advise.

Regards
veena
0 votes Thank Flag Link Fri Jan 21, 2011
A few month's ago Fannie Mae stopped supporting loans issued on all Battery Park buildings because many (but not all) of those building's had underlying land leases that were about to expire. Fannie had no way to predict the new land lease "rent" for these buildings - and therefore no way to know what the monthly carrying costs for each condo it might lend on. The risk was seen as too great - so Fannie pulled out for a while. This uncertainty has largely gone away and Fannie has started lending again on most buildings - those without land leases and those with lease terms and rent that are not in question. Others are still waiting to be cleared from Fannie's list. The agents below brought up other good points that affect lending in BPC.
0 votes Thank Flag Link Fri Jan 21, 2011
It was more of a problem a number of years ago than it is now. There are plenty of building in BPC that are on approved lists from banks. There could be a few potential problems though. One is saturation in a specific building. Banks do not want to lend on a high percentage of total units in any one building. WAMU was one of the big lenders in BPC, and since they were bought by Chase, that added loans from both to Chase's numbers. Some buildings are declined by them at this point because of that.
0 votes Thank Flag Link Wed Jan 19, 2011
There are tons of potential reasons, maybe a little of each:

1. There is just too much inventory and not enough people who want to live in the area. It is kinda far out from anything relatively speaking. That usually spells price drops, and mortgages + price drops don't mix!

2. I hear there are some potential tax issues in regards to the BPC land lease from the government. It seems that there might be a surge in building taxes coming up and that could make the condos there lose value. Look at it like other areas of town, the higher the fees/maintenance/cc/tax, the lower the price of an apartment to make up for it. I am not sure what happens if enough people do not occupy a building when it has to pay the government for land leases. A building default? Could be trouble!

3.The prices of apartments there are just over priced! If the bank assesses the value of an apartment/building lower than the cost of the building's purchase price, they won't let you mortgage it!
0 votes Thank Flag Link Wed Jan 19, 2011
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