Banks making coops harder to renew underlying mtg?

That depends on most importantly what the financials of the building are.

Maybe they should consider renewing the mortgage now rather than wait unless they have a huge prepayment penalty.

But banks are giving underlying mortgages.
Ellen Silverman
E.S. Funding Co.
www.esfunding.instantlender.com

How big is the building?

I believe most underlying mortgage loans have a large prepayment penalty until 60 days in advance. And you probably can't expect a rate like a residential mortgage. I'd figure at least 100 basis points higher, maybe closer to 200 with a small building if you're looking to lock in at least 10 years.

Some factors that will impact your loan options are number of tenants in arrears, number of sponsor owned and/or rent-controlled apartments (esp. if rent does not cover maintenance), and number of sublets in the building.

Underlying mortgages also come with fairly hefty refinancing fees and are very expensive to the building. $25-30k in fees can be a difficult pill for smaller buildings to swallow, which means it usually gets rolled into the debt.

I'd be more worried about the long-term than the short-term, though. If you're looking at small to medium building that's loaded with a lot of debt, realize that it's probably never going to go away and it will probably get worse, just from buildings rolling in refinancing costs (and costs of other projects du jour) and interest rates eventually going up over time.

In our building, we bit the bullet and refinanced to a self-liquidating loan. It was really the only practical solution that would address a too-high debt level dating back to the sponsor and the burdensome refinancing costs. It did mean raising maintenance to levels that are on the medium-high end of the neighborhood, though.

Getting financing will be difficult if your building dies not have good financials.

http://www.habitatmag.com/Publication-Content/2011-June/Featured-Articles/fannie-mae-freddie-mac-co-op-condo-financing-guidelines

Our co-op had no issues refinancing. We had over half a dozen banks bid and closed on a 10-yr fixed at 4.75%.