Coop Building Less than 50% Owner Occupied

Just curious, is this because you're buying into a conversion or new construction (https://www.hauseit.com/condominium-conversion-vs-new-construction-nyc/)?

I'm guessing that is the reason. If so, ask the sponsor for their preferred lender. Read this article first, these are much hairier than straight re-sales.

Pro tip: ignore that article. There is so much misinformation that it's too much effort to go over point by point.

dc1091, personal banking relationships might work in these circumstances if you have any. Also, reducing the leverage might help get a bank to lend. And maybe you should speak to a mortgage broker with connections to certain banks who consider such non-conforming loans. But however you might solve this, it looks like you have good reason to renegotiate a lower price.

Feel free to send a link to the apt. listing so that people can give you clearer advice.

Hopefully you are getting at least 10-15 percent discount over a comparable coop due to difficulty in financing.

Keith Furer at Guardhill is excellent.

Keith Burkhardt
The Burkhardt Group

dc1091,
I think one thing that you should consider is if that you're having this much trouble getting a loan at a time where lenders are still fairly open about their lending criteria, what will happen when you want to sell? Especially if that coincides with a time where lenders have constricted lending? If this is an apartment you plan on spending the rest of your life and it's one thing, but if it's a short to moderate term Buy you could end up getting stuck. Plus even if the lending climate doesn't change you will have a restricted pool of buyers.
Lastly, that type of building usually has difficulty getting large projects done (lobby/hallway renovation, etc) because the non-resident owners vote against the projects because they don't get anything out of it (i.e. it's solely a financial thing for them - quality of life issues do not exist).

@ dc1091 : try those 2 banks , instead of going through a mortgage broker, with each of them and they can be a bit more flexible with coops with low occupancy rate or even people buying (flexible) coops for investment purposes:
> ncb.coop
> www.fnbli.com
I have a mortgage with each of them on investment coops. Good luck

Nicole

I am a mortgage broker and real estate broker.
I do financing in non warrantable buildings. I do not take an application fee. Feel free to contact me. Many lenders will only offer an adjustable rate mortgage for this type of mortgage which is not advisable in the interest rate environment we are now in.
Ellen Silverman
Licensed Mortgage Broker since 1990
NMLS#60631
Esfundingco@aol.com
212-786-9682

@30 years, if one is having this much trouble getting a mortgage, it could be that they never went to a mortgage broker.
Non warrantable buildings are very common in the city, I live in one myself, and financing is easy to obtain here.

I have at least five mid size lenders who finance in non warrantable buildings and one major lender if the purchaser is buying the unit as their primary residence.

In my building we have no difficulty getting large projects done.

What is the rate difference and mortgage broker fee?

rate difference: typically 50bps per year
mortgage broker fee: no idea

That seems fairly small difference. Guessing broker will charge 1% origination. So for 10y hold is another 11-12bps. However, 60bps at 4% cap is 15% discount in property value. 3% is 20% discount. This assumes that the property will always be 50bps higher to finance.

@300, not certain of your question on rate.
That said many lenders and brokers use unwarrantability as an excuse to inflate fees and rates.
I am not showing a big difference in rates for investor units if the building is warrantable.
Unwarrantable buildings can apply for a PERS approval with Fannie Mae. My unwarrantable building has a PERS approval and the rates are the same as if the building was warrantable. I can refer lenders to boards that process the PERS approval.
When someone wants to purchase in an unwarrantable building, it is a good idea to find out why the building is unwarrantable. Sometimes it's a sponsor who owns more than ten percent of the units but is in the process of selling his units as they become available.
As far as mortgage broker fees, the lender can pay the broker.
Using a mortgage broker is not only a question of rates and pricing. A good mortgage broker who is experienced and has substantial knowledge of financing and market conditions can save a client at times quite a bit of money, not to mention they work with a large pool of lenders.