SPONSOR UNITS vs OWNER OCP

It's fine - you will get a mortgage from most banks. There will probably be a portion of units that are rent regulated, and a portion at market. The rent regulate folks (in my experience) have been in the building/neighborhood a long time and treat the building/neighborhood as owners would. The market rent folks are hit or miss, but given how high rents in Manhattan are, tend to be a good bunch usually.

It is actually a big issue. I just went thru this with a building that is 21% sponsor owned. Not new construction. Fannie Mae guidelines are now saying that more than 10% sponsor owned is not compliant. You have to put more down...and the due diligence is insane. This was for a condo...not sure if a co-op is any different.

Yeah 1 sponsor could be seen as a default risk by the banks. Just go thru the financials and see what the sponsor intends to do. If the units are rented out I highly doubt the sponsor will default. It wouldn't stop me from purchasing a unit from the sponsor.