Home Buying in Secaucus>Question Details

Liz, Renter in Union City, NJ

Why are some mortgage lenders reluctant when it comes to buying a co-op?

Asked by Liz, Union City, NJ Fri Sep 7, 2012

Help the community by answering this question:


Call me I can get Co-ops closed.

Jose Martinez
Coldwell Banker Home Loans Hoboken
0 votes Thank Flag Link Sat Oct 13, 2012
Good morning Liz,

The single biggest problem we Lenders encounter with Co-Ops today in the New York Metropolitan Area is the Co-Ops are not qualified. The Purchasers may be Triple A qualified for a Co-Op Loan (it's called a Co-Op loan, not a mortgage) but if the Cooperative is not of satisfactory financial standing we won't lend in the Cooperative no matter how well qualified the Purchaser is.

The Managing Agents of these Co-Ops are doing a terrible job of keeping the financials updated every year with FannieMae. Too often you may encounter a decent Cooperative where the financials are stable but due to the Managing Agent's failure to provide the most recent financials to FannieMae, the Cooperative loses its approval.

When the market was active we Lenders did the updating. No longer is that the case. It's just not worth the time and effort to submit updated financials just to do ONE loan.

And I can't even tell you the frustration we experience just trying to get a Managing Agent's office to fill out a basic single-page Co-Op questionnaire (the first step in qualifying the Cooperative).

There are two other issues with Co-Ops:
1. High delinquency rates of HOA/maintenance fees thus destabilizing the financial standing of the Cooperative
2. High "Investor" concentrations within the Cooperative. Owners can't sell, so they are renting out their apartments (when permitted by the by-laws). This decreases the percentage of Owner-Occupied units, increases the percentage of Investor untis and thus provides FannieMae with a reason to reject the Cooperative.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
0 votes Thank Flag Link Sat Sep 8, 2012
I’ll add to Laura’s response, traditional mortgages are designed to finance real estate, not shares. One more point, if you have trouble getting in it is twice as hard to get out. Most buyer’s do not have an exit strategy.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
0 votes Thank Flag Link Sat Sep 8, 2012
In a co-op you don't own land or a home, but shares. Housing Cooperatives are a distinctive form of home ownership. The by laws in a co-op vary, but In most co-ops you can not sell the share to your unit without Board approval of the purchasers.
0 votes Thank Flag Link Sat Sep 8, 2012
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