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.
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker â€“ NYS Dept. of Financial Services
NMLS # 6395
Financing Kentucky One Home at a Time