New Condo Financing IS OVER! PEOPLE LOSING CONTRACT DEPOSIT!

REALESTATELAWYER: about 22 months ago

Hang tough people. Sellers are starting to pay for the transfer tax. Ex. Charleston condos are starting to pay for the transfer tax if you negotiate with them!

Kelly8956: about 22 months ago

To malraux: from my experience, you are absolutely correct. Loan "qualification" is determined on a case by case basis and also depends on the carrying costs of the building. For example, if there is tax abatement and maintenance is low, the buyer would qualify for a larger loan. Also, credit score 700 is considered great by lenders.
To Mel: there are all kinds of buyers on the markets, e.g., many investors specifically look for one bedroom condos, couples who have the combined $300K income, etc.) I don't think that your guess that 90% of buyers would not fit the bank's requirement is accurate.

Mel: about 22 months ago

Bugelrex and malraux - I will venture my own guess: I think malraux's estimate of requirements to buy an 800K condo in Manhattan is WAY off.

I would even go so far as to say that people who make 300K+ with a net worth of $400,000 after down payment are very rarely looking at 800K apartments. Maybe pied a terre types. The vast majority of people looking at this product would not fit malraux's criteria (and by vast majority, I'm guessing over 90%).

That's my two cent

malraux: about 22 months ago

bugelrex:

Since I'm not a MB, I honestly don't know the answer to your question. I could hazard a guess, but it's ONLY a guess (I'll assume it's a new build)...

- income $300K+.
- 10% down (20% or more is better).
- no serious debt, except credit cards you pay off monthly, and/or the mortgage you currently hold, if you have a home that you're now selling. In addition, a net worth of $400,000+/- after down payment is made.
- credit score 700 minimum, 750+ preferred.

bugelrex: about 22 months ago

maulraux,

It would be interesting to find out what 'qualified' means these days. Years ago it was 'fog a mirror'. To buy a 800K condo in Manhattan what is the MINIMUM quals?

- 250k income?
- 20% down? 10% down?
- very low debt to income?
- credit score?

malraux: about 22 months ago

okay, here's what I heard from my MB:

To a CERTAIN extant, mijabe54 is correct. It was not new news that some lenders (basically HSBC) had tightened their loaning standards as mijabe54 described. That actually started approximately a month ago, and was something I was aware of. However, the assertion I was having a hard time following was that this would be an across-the board policy followed bank after bank, and that basically no one would ever be able to get a new condo loan, regardless of location/credit history/debt load/net worth, unless the project was alrady 90% sold (sorry REALESTATELAWYER - but it ain't happening that way). And even then, they would either have to be prepared "...to have your deposit taken or end up with horrible terms at the closing..." (sorry, mijabe54, but that ain't happening, either).

This is just patently false.

The situation is as I said. This is limited, basically to HSBC, which was old news three or fours weeks ago. Other lenders, such as Wells Fargo, are not employing any remotely draconian version of this policy. As I DID describe earlier, banks ARE indeed taking a harder look at credit and debt ratios (sorry michabe54, you're wrong about this as well), as well as credit history, and yes, location of the specific project. In fact, many banks have now created what they call a 'grid schemata' based on these variables that I mentioned earlier.

In addition, new developers are not by any means out in the cold. They are simply going to multiple lenders (such as Wells and others) and having them agree in ADVANCE that they will write the paper on their development. That way, should you wish to purchase in a new development, you will simply go to one of three or four lenders who have ALREADY pre-approved the new development project, and have already promised that they will provide mortgages to qualified purchasers. That way, a buyer will be GUARANTEED the mortgage, as long as they are qualified, of course, - and all without preparing "...to have your deposit taken or end up with horrible terms at the closing..." In a certain, way, I think this is great for NYC, as developers, by getting this kind of pledge from lenders, will not have to worry about market variables to the extant they currently must. It will limit new builds to the best located, highest quality, most desirable, and set a bar sufficiently high enough to limit rushed, crappy, poorly conceptualized new developments, while at the same time keeping a lid on new inventory.

Further to this assertion, I confirmed I can still easily get a Jumbo 30 year fixed coop/condo loan (0 points) at 6.25% fixed for pretty much any project I would care to buy into right now. And yes, without having to worry about my "...deposit taken or end up with horrible terms at the closing..."

tenemental: about 22 months ago

malraux, what did you hear from your MB?

REALESTATELAWYER: about 22 months ago

buyer boy

If your credit is good, goto Wells Fargo or Mortgage Bankers

will: about 22 months ago

Sounds very reasonable buyerboy. May depend a little bit on where in Hell's Kitchen, but that is a hot area! No pun intended. You may want to check the comps on this Web site.

I am partial to Wells Fargo but I've heard a lot of good things about brokers at Manhattan Mortgage and Park Ave. Mortgage.

buyerboy: about 22 months ago

Can anyone recommend a bank or broker that can help me get a mortgage on a condo in a new development in Manhattan?

I plan to buy in one of the new developments in Hells Kitchen.
The price is a reasonable (I think) $1,050 psf considering the apartment is brand new - mint appliances and bathroom and is a studio...

Does anyone have any comments on whether it sounds like a decent value.
(of course only time will tell for sure)

Thanks a lot for your help!

will: about 22 months ago

Seems like banks are inclined to not want to slip into a disaster...

http://www.cnbc.com/id/23115224

Kelly8956: about 22 months ago

To comment on some of the earlier posts, lenders do not require that a Manhattan new condo development is 90% sold in order to lock in the rate now. Buyers who meet the requirements, i.e., have the down payment, good credit, and appropriate income can get attractive rates for their new construction/conversion condo purchases.
Engage a real estate lawyer who can confirm questions such as the investor/owner ratio, etc. Ask the sales agent for a list of lenders that have the building on their preapproved list.

kam23: about 22 months ago

i did speak with a mortgage broker at hsbc about two weeks ago and they did tell me that they wouldn't finance any building that is not complete and is not 90% sold. ridiculous but true.

Kelly8956: about 22 months ago

How will the increased conforming loan limit affect Manhattan real estate market?

malraux: about 22 months ago

"...I've provided evidence that this change is happening...."

No, you haven't, because as I said earlier, your assertion is contrary to my evidence as of Friday afternoon 8 February. I shall see on Monday exactly how true or false your assertions are.

"...I've never claimed that it is impossible to get a decent rate for a condo purchase,..."

So your quote to me that 'if you are really banking on that loan coming through, prepare to have your deposit taken or end up with horrible terms at the closing' wasn't REALLY what you meant? Oh. I see. Sounding alarmist is contrary to your calm, evenhanded, and cool, collected rhetoric.

Okey-dokey.

I'm really looking forward to that Monday morning chat with my MB now.

mijabe54: about 22 months ago

Who's talking about credit and debt ratios? The discussion here is whether or not FNMA and other players in the lending industry are radically changing their guidelines to restrict new construction condo loans. I've provided evidence that this change is happening. I've never claimed that it is impossible to get a decent rate for a condo purchase, but rather that it has become increasingly more difficult and that this trend does not bode well for the new condo market.

aboutready: about 22 months ago

malraux, I agree with you, I don't think that many lenders will be looking for 90% sold buildings. The more troubling fact that I've been hearing is that certain major lenders are not including certain buildings on their "approved" lending lists, and I don't think the reasons have yet to be given.

One problem with our current expansion is the foreign investment which has made many so happy. When buildings were selling out easily (or relatively so) it didn't much matter. But let's say a building sells 50%, 15% to foreigners. That makes the building 35% owner occupied. Most new buildings under the old (pre-2007) financing scenarios had no problem with this. The banks assumed the remainder of the building would be sold, and the 15-40% foreign/investor ratio wouldn't matter, out of 100% sold. Well, now that buildings aren't selling out before closing, and more and more people are needing to rent, the lenders could get very worried given their other problems. A broker I know told me that managing agents just tend to bend the truth when it comes to owner occupancy, but I doubt they'll be doing so in this hyper-regulatory atmosphere, and people who have bought certain properties may find that they can't sell them because their building's occupancy ratios don't meeet bank regulatory guidelines, and their buyers can't get loans.

malraux: about 22 months ago

REALESTATELAWYER (&mijabe54):

I didin't mean to infer that this is not in any way, shape, or form happening - I believe you that it is! But not across all markets, nor across all potential buyers. I am aware that banks have been pulling out in the middle of transactions as far back as last August (2007). No news there. But the sweeping genralization that ALL buyers, regardless of crediy history, net worth, and property location will be unable to get ANY FM backed loans in Manahttan at current 6.25% (+/-) 30 year fixed jumbos for a coop/condo that isn't 90% sold without throwing massive down payments at the closing or else they will be penalized with 'horrible terms' at closing is preposterous.

As I said, I will speak with by MB on Monday to confirm/reconfirm this to be the case and report back.

REALESTATELAWYER: about 22 months ago

Like I said this is a recent event. Malraux doesnt seem to understand that this is starting to happen.

Marlaux ... We are not your enemy. We are just trying to tell people to be more cautious when getting financing. Mijabe54's HSBC link is very helpful. I have just started recently experiencing banks pulling out in the middle of a transaction.

JuiceMan: about 22 months ago

malraux, thanks for that. I was looking forward to your reply and you exceeded expectations.

malraux: about 22 months ago

mijabe54:

"...1) if you are really banking on that loan coming through, prepare to have your deposit taken or end up with horrible terms at the closing. Perhaps you should enlist the help of a better mtg professional who keeps abreast of MAJOR industry changes..."

You're very funny. I've worked with my mortgage broker for about a decade, +/-. I spoke with him friday. There is absolutely no proviso regarding the OP post. As I said before (and I'll say it again) I can get a 30 year fixed Manhattan condo/coop Fannie Mae backed loan today at an attractive rate (6.25%) for an appropriate project that is definitely under 90% sold. And my deposit won't be taken away, and there will be no horrible terms at the closing. But I'll tell you what - in the interests of fairness, I will call him monday, re-review this information, and report again.

"...2) your distinction between 'prime' NYC markets vs areas of BK shows you don't know much about the lending industry. Lenders make very few distinctions in their guidelines and rates for geographic location. It really only matters for loan-to-value ratios..."

Wrong, and wrong again. Lenders in Manhattan and Brooklyn are now looking VERY, VERY hard at not only credit history (which you don't even mention) and net worth/debt ratio (another thing you don't even mention), but are now ALSO looking very hard at geographical location.

Perhaps YOU should enlist the help of a better mortgage professional who keeps abreast of MAJOR industry changes, mijabe54. I can help you with this if needed....

champura: about 22 months ago

Comment was deleted by moderator.

11201962: about 22 months ago

Comment was deleted by moderator.

mijabe54: about 22 months ago

Yes, other lenders will definitely still lend in projects that are less than 90% sold, but only on their non-conforming products. However, it is a very scary trend that HSBC and IndyMac have both extended these restrictions to ALL of their products. These are two major nationwide lenders.

Kingdom231: about 22 months ago

What I was told last week was that HSBC has stopped lending to buyers that are purchasing condos in buildings that are not 90% sold. However, at the other banks, chase, citi, I was told that the new rules meant that they would simply require more documentation for condos that are less than 90% sold. i.e. that they could still lend under these circumstances.

From a practical point of view, I think it is probably unreasonable to think that no one can get a mortgage in condos under 90% sold. Sure realistically that would cripple the condo and larger real estate market and I pretty sure that that is the last thing the economy needs now

mijabe54: about 22 months ago

No, it most definitely applies to the home buyers. "secured by loans IN a condominium"...does not refer to the construction financing or acquisition loan for the building.

IndyMac is the only other lender that has extended these new restrictions across its entire lending platform.

JMGJAG: about 22 months ago

it seems that this applies to condo developers
not condo home buyers

REALESTATELAWYER: about 22 months ago

I would suggest all buyers who are in contract to contact their loan officer just to double check. Remember, this only applies to new constructions.

Mijabe54: How many other banks are following? Chase? Citibank? Wamu? Wells Fargo?

downtown_girl: about 22 months ago

Damn. Am I missing something? That seems to prove it.

mijabe54: about 22 months ago

Will,
The section on HSBC's website that you are referring to relates to construction to permanent financing for single families, not new condo projects. Here's a link to HSBC's policy notice:

https://webloan.us.hsbc.com/hsbc_lqrnet/pg/newsletter/cp_2007-12-11_w.pdf

This policy change is a FNMA one and thus affects ALL lenders who deliver loans to them (almost everybody). HSBC has evidently taken the new restrictions to heart given the state of the condo market (FL, Vegas, CA) and has applied them to all of its portfolio offerings. Note other lenders have not done so (yet), but if they do then the higer-end market (loans > $417k) will surely start feeling it.

champura: about 22 months ago

REALESTATELAWYER: Creating fake accounts thanking yourself does not bolster your case.

11201962: about 22 months ago

REALESTATELAWYER: Sincere thanks for your posting.

will: about 22 months ago

Source where specific assertions can be documented?

REALESTATELAWYER: about 22 months ago

Mijabe54

Finally... a person that understands. Created this forum just to inform soom people.

As to will's Deick Chaney comment... this forum is not to scare people. Just be more cautious with this guideline change. It will swing the market and builders will be digging a big hole for themselves.

will: about 22 months ago

Some of this is starting to remind me of the quote recently attributed to Dick Cheney, "Be afraid, be very afraid."

urbandigs: about 22 months ago

there has to be some source that explains this...I appreciate the inside scoop, but for everyone OUTSIDE, all we are asking for is a source that discusses this. Can you please provide one? No one is denying tighter lending underwriting given the repricing of risk. Most on this forum, even the ones in denial, still acknowledge that this is a much harder lending environment than in years past and that providing docs to backup financials, credit, salary, etc. all actually mean something now.

will: about 22 months ago

So you are asserting that HSBC is imposing this? Not Fannie May? How do you reconcile with the link below, and can you provide additional sources.

http://www.us.hsbc.com/1/2/3/personal/home-loans/mortgage/mortgage-programs/specialized#newconstruction

mijabe54: about 22 months ago

Wow! Had no idea what a bunch of assholes are on this forum. REALESTATELAWYER is actually 100% accurate. It's interesting to me that people would deride him for offering a crucial piece of information. Why assume he's a complete idiot making this up? What's the point!?!? Is it not more believable that perhaps lenders/investors have begun tightening their guidelines in the face of hundreds of billions of dollars in losses?
I work for one of the leading mtg companies in the city and here is the real scoop:
The vast majority of conforming loans (under $417k) that the major lenders offer are set to FNMA's underwriting guidelines so they can be delivered to FNMA after funding. These loans get securitized into 'Agency Debt' (agency being FNMA). These loans comprise the majority of the conforming lending market. There are also loans that are based generally on FNMA's guidelines, but may not require the new condo restrictions put in place by FNMA. However, these are few and far between and generally have much tighter standards such as full documentation of income and assets, larger down payments, etc.
****In addition to the 90% presale, FNMA also requires control of the HOA be turned over and the building be 100% complete.**** This will pose HUGE problems for developers who will try to continue closing projects floor by floor, while still gutting some areas of the building. REALESTATELAWYER is also correct in stating that HSBC instituted these new guidelines for ALL of their products, both conforming and jumbo. Less lenders means less available funding, less funding means less buyers, less buyers means less sales...getting the picture??? This is BAD NEWS for the NYC new condo market any way you look at it.

malruax, two points for you:
1) if you are really banking on that loan coming through, prepare to have your deposit taken or end up with horrible terms at the closing. Perhaps you should enlist the help of a better mtg professional who keeps abreast of MAJOR industry changes. I can help you with this if needed.
2) your distinction between 'prime' NYC markets vs areas of BK shows you don't know much about the lending industry. Lenders make very few distinctions in their guidelines and rates for geographic location. It really only matters for loan-to-value ratios. If the county is deemed to be in a declining market, then lenders will shave 5-10% off what they'll normally lend. So if it's usually 80%, you'd only be able to finance 70-75% if located in a declining market. Kings County (Brooklyn) is certainly NOT considered a declining market.

TheStreets: about 22 months ago

Maybe he's in the same country as Spunky who exhibits a similar command of the language. Spunky, every time you try to say something smart assed you end up having to post an explanation - "hep out" ... "team I.L.W.A.J." %u2026 what are you talking about you fool?

Get your husband to read over your posts before you send them.

kylewest: about 22 months ago

Does REALESTATELAWYER practice in America? Because his (lack of) command of written English reminds me of the spam I get telling me my Paypal Account will be closed if I don't click on a link and immediately send my social security # and bank account info to a help desk in Nigeria.