"Deal Fell Through" or Discriminatory Board?

inonada,
60s-era condo = St Tropez 340 East 64th Street (first Condominium in NY)

Ali, regarding your "consider all points" question

1) Each member of the "model couple" could afford mortgage + maintenance of the apartment on their own, no double income necessary to carry the apartment. Was the board assuming they would both loose jobs at the same time, be both unable to find new jobs for two full years, and eventually run out of mortgage + maintenance reserve money and stop paying maintenance? Really? We are talking about people in late 30s/early 40s = career prime.

2) People should be able to change jobs and careers, move to different cities, etc; I do not see why it is board's business to try to predict the future and whether someone's career might not work out, or if they might want to get married, or have kids, etc. If boards made it less of their business, it would in fact help eliminate the coop illiquidity, and major life changes would be less of an issue if one could always just quickly sell the apartment. Also, what kind of qualifications does the board have that allows them to accurately predict someone's future career success, marriage working out or not, etc.?

3) The less restrictive coop the couple ended up buying was priced the same, with similar monthly cost, as the one they were unable to buy. Clearly some other board thought they could afford it.

4) A friend of mine, 4 years into her finance career straight out of college, recently bought a 1br in a restrictive 30% down Sutton Place building. The board kept asking her for "more information" for months, stretching out the process beyond any reason. One of the board members said in the interview something like "my son is older than you and makes more money, but is not yet buying in the city, why do you think you should own an apartment?" They ended up approving her in the end (she was also lucky to be of the right skin color), but my question is, what does the board member's son and his career/decisions have to do with her purchase?

Regarding square foot count difference between coops and condos, just want to flag that brokers seem to compensate for this problem by exaggerating sizes of coop apartments by at least 10-15% in my experience. They typically cannot do this with condos.

@Krolik
Imagine if they rejected your friend after that comment laced question?

Just asking for litigation. A lot of these board members are, to top it all off, also morons.. clearly.

There are many many topics I am frequently reminded by HR not to ask prospective employment candidates and age/gender based stuff is quite high on the list. Did they ask her if she likes boys or girls too? Hit the trifecta at that point?

Great response would have been "I guess I don't spend all my income on hookers and blow like your son?"

The idea that someone stupid enough to ask a question like that is also soberly & soundly managing the finances of the building is.. maybe a stretch.

Nada, Appx 10% in an old analysis. It does not say it is NYC only. But some interesting info.

https://www.millersamuel.com/files/2006/07/coop-condo-article-july-23_2006.pdf

Also, there is no mortgage tax if you take out a mortgage on a coop saving the buyer 1.92%.

@Krolik thanks for those excellent points.

@Ali I think you're imagining a utopia where every person's future is immediately predictable. See, this is another reason why the whole coop structure is an instant failure when it comes to fairness and objectivity. Banks, with plenty of training to qualify, look at an applicant's credit history and their current financial liquidity. Based on those, they make a decision on their likelihood to be financially responsible with a loan. Coop members - most of whom have no form of finance training whatsoever - look at an individual, project macabre situations in their futures (again, more often than not, based on race) and decide they won't be a fit.

Can we just agree then that most coops are thinking more about family wealth than individual worth when considering applicants? It sounds like this is what you're inferring. I could purchase a home all-cash, yet fall into some unfortunate times a little while later. There is no absolute in life.

Honestly, it shouldn't be this hard. And the fact that those who are most negatively impacted are of a specific demographic makes it plain this is a systemic problem. It's 2022 and most coops in NYC - NEW-freaking-YORK-CITY - are still predominantly lily-white! Make it make sense, I pray. ?

Thanks, 300. In the big picture, 10% doesn’t seem like a whole lot compared to the brouhaha people make about coops being cheaper. Seems like an incremental degree of price for a corresponding degree of lesser rights.

30yrs, what’s a comparable coop around St Tropez.

@joey42
>> It's 2022 and most coops in NYC - NEW-freaking-YORK-CITY - are still predominantly lily-white!

My co-op isn't.

>>Banks, with plenty of training to qualify, look at an applicant's credit history and their current financial liquidity. Based on those, they make a decision on their likelihood to be financially responsible with a loan.

Look out how well that worked out in the Great Recession. You may be arguing that the typical co-op standard of housing at 25% of income might be too tight, but the Major Lending Bank standard of housing pushing up to 45% of income is irresponsibly too loose.

>>Can we just agree then that most coops are thinking more about family wealth than individual worth when considering applicants?

No, I won't concede that point either. There is a certain set of "country-club" type co-ops for which that may be the case, but I think it's not "most."

Banks repackage the loans as per the criteria investors (most with other people's money) are willing to buy. I think coops should be able to have higher financial requirement with a legal cap but it should be written down and transparent along with any other criteria they have.

There are plenty of brown and Asian people in the coops - of course they all have enough money to quality and likely no family wealth.

"to qualify".

>> Banks repackage the loans as per the criteria investors (most with other people's money) are willing to buy.

Let’s not forget that OPM here often is neither the banks nor investors in even the typical super-intermediated sense (e.g., you in your 60/40 Vanguard fund). Rather, it is federal agencies in one form or other. E.g., Freddie/Fannie/FHA guarantee the credit risk. And these days, the Fed is buying a lot of the mortgages and taking on the interest rate & prepayment risks.

Indeed, but most apartments are capped out in agency loan size in good areas where the stuffy coops exist.

Is Fed buying Jumbo private RMBS as well which is where presumably a lot of these jumbo non-agency loans end up?

@ionada 10% would be a huge difference in price in my book if it were for the same product, especially considering how expensive NYC real estate is. However, when I am thinking about "coop discount", I am definitely thinking about condos vs. those difficult coops where the difference is more pronounced. Why wouldn't I want to buy a million dollar apartment for 25% less (or a million dollar apartment with 25% more space)? Yes, extra headache, but 25% more space could make a big difference in my NYC space-constrained life, and I am not at a point where I would consider paying extra 250k for a more convenient purchase application.

Going back to "fair" and easy coops, theoretically, the price difference vs an equivalent condo should primarily come from the underlying coop mortgage. Let's say that a building with 10 equally valuable apartments has a 1M mortgage. You can attribute 100K of that mortgage to each apartment. The apartments therefore should cost what a comparable condo would cost, less 100K mortgage, and the price difference would completely justified, because monthly payments on that mortgage, reflected in maintenance, would make carrying the coop apartment more expensive. Some coops do not have a mortgage, or have a small mortgage, so this is not a universal factor (the Dorchester in posts above did not have a mortgage prior to the pandemic, for example, and even has some commercial properties rented out that help lower the maintenance charges).

In terms of value of "rights" to rent out an apartment, or buy it via an LLC, or buy it as a foreigner, or other freedoms that are typically frowned upon by coops, I think this is not a straightforward calculation of value of such rights because most of these "rights" do have a flip side which is a benefit. For example, the limitation on number of years anyone is allowed to rent an apartment helps make sure the banks continue to lend to buyers in the building. Banks do not like condo buildings where most apartments are rentals, and can refuse to finance purchases in such a building. I have seen several condo buildings in such situations, it is value-destructive, as you are only limited to cash buyers. Other "rights" that are thought of as typically a "coop problem", are actually also often found in condos. Applications to buy and rent are almost as burdensome to put together at NYC condos. And I have seen condos with income restrictions, pet policies and flip taxes on sale.

So we hope and for a moment assume that the discrimination in coops is more or less eliminated. That should push up the price of coops to close to condos adjusting for other factors. Who benefits - Existing coop owners. Not the current potential coop buyers who don't think they can qualify. So economically, most beneficial scenario for the current potential coop buyers is for discrimination to continue except against them?

By the way, as a coop owner, I would like any type of discrimination except clearly stated reasonable financial requirement to be eliminated so that I can benefit from higher prices.

@front_porch I clearly said "most" not "all". So saying yours isn't, while unverifiable, even if true, does not invalidate the fact.

Are you by chance suggesting that NYC coops do a better job of vetting people than Banks? LOL... surely you know that's laughable. Your leaning towards a consideration of access to family wealth as a veritable criterion for being eligible to purchase a coop suggests you innately believe only a certain class of people (and frankly, by extrapolation, kind of people) should be able to purchase coops in NYC. Perhaps I'm misunderstanding you?

I mean, I think we can all agree that generally, most Brown and Black people don't have access to generational wealth. So, if we're unable to favorably qualify a person based on reasonable criteria, then we're systematically shutting out an entire demographic from growing their social class. "Reasonable criteria" should not include a 30%+ downpayment (in my opinion, not even 20%+), 2yrs+ of mortgage+maintenance worth of savings, a 7-figure bank account to purchase a 6-figure coop e.t.c...

The thing with racism in the 21st century is that it's not always overt; it's presented in a gray area where there can be plausible deniability. Take for instance the response to drug epidemics - crack-addiction was treated as a criminality whereas opioid addiction is looked at as an illness. On the surface, little-to-nothing references race, but when one considers the demographic preponderance of each of those substances, it's clear that one hits one community harder than the other, it's clear that there's a racial bias in assessment and response. And the response to each epidemic evidences the kind of disparate treatment that underlies the belly of the beast that's racism.

To me, I just find it really absurd that people think they can claim to be against discrimination, yet in the same sentence argue for it. In life, if I want to disqualify a person, I can always find a reason to - even if I need to hide under a more societally-embraced 'reason'.

>>>>>Imagine if they rejected your friend after that comment laced question?

Just asking for litigation. A lot of these board members are, to top it all off, also morons.. clearly.<<<

@steve -- by the time the process gets to the interview, it is extremely unlikely a board will turn down the buyer. Interviews are usually a formality; most turn-downs happen during the purchase application review stage.

@300_mercer
yes, I think prices of most restrictive coops would go up if they simplified the process and eliminated overly restrictive criteria, but it is not so black and white, and probably not zero sum

Here are few potential effects:

1) Currently excluded buyers would get access to these units, bidding up the prices. This is good for existing owners, but is also great for currently excluded buyers because it would increase the number of available lower priced options

2) It might decrease prices of non-luxury condos, as accessible units at lower price points would become less scarce and would be competing for buyers with additional supply of coops

3) It would CREATE VALUE by increasing liquidity of coop units and decreasing transaction costs. Right now many of these for sale units stand empty for months if not years, unable to find a buyer that could satisfy the board, wasting valuable Manhattan real estate. Buyers and brokers have to spend time putting together multiple board packages that end in board turndowns, etc.

4) It would DESTROY SOME VALUE for select existing and future shareholders (not the ones currently being discriminated against) that derive utility from ability to hand-pick their neighbors. Several people who commented on this thread clearly prefer the status quo and would be in this camp.

Maybe also some small second order effects like:

5) Decrease costs of housing in Manhattan (especially Sutton Place and Upper East and West Sides) by increasing supply via increased utilization of units which are otherwise staying vacant while looking for buyer

6) Increased liquidity/decreased transaction costs could result in more frequent transactions, increasing tax revenues for NYC and real estate broker revenues

>> 300_mercer: "There are plenty of brown and Asian people in the coops - of course they all have enough money to quality and likely no family wealth."

That is a good point. In my experience NOT ALL, but a good amount of discrimination happens based on social class, rather than just race, and those Asian and brown people that were born into money, or were able to get into the higher social class on their own, often find themselves accepted into elite institutions, social clubs, coops, etc. (They might face increased risks of being killed by a cop, but that's not necessarily relevant to a coop purchase process).

However, since certain races are overrepresented in certain social classes by birth, and because as a society we have limited upward mobility, social class discrimination disproportionally affects colored people and therefore we can argue that due to disparate impact it is often the same thing. I would rather frame the conversation around social class, but it seems that society is not ready to have a conversation about that, unless it is framed around race, so it might be a multi-step process to get everything right.

@Krolik I think if you were talking to Europeans (or anyone raised in Europe), the distinction between social class and race would be a bit clearer. Because that culture has always been stratified based on class. The US on the other hand has a very peculiar history with race, one that makes the ordinary intersection between race and class not so distinct or the elements separable.

There's the concept of perception. That concept transends all spheres of human interaction. Race is such a potent force in American society that it's nearly impossible to extricate it from other social issues. We would love to think that people make certain decisions based on money and money alone, and that may well be true in many instances, but when the same people also subconsciously associate said money with race, then race and money (social class) become one and the same.

Ask the person who never got called for an interview simply because of his name or the person whose house-appraisal literally doubled when he got a white friend to stand in for him during appraisal. No, America cannot hide under class; we simply don't have that level of 'sophisticat'. The same way Europeans associate certain behaviors with class, Americans associate certain behaviors with race. One cares little about what color you are, the other cares little about how much money you have.

> because as a society we have limited upward mobility

All I will say is that America may not be perfect but offers more upward mobility in income and social acceptance than any other country I know. We have major corporations being run by foreign born non-white people who came here as poor students.

And there is no law against discrimination based SOLELY on how much money you have whether self earned or inherited in a capitalist country when it comes to someone sharing financial risk with you (existing coops shareholders do that when you buy). I truly believe that if you have enough money as per coop requirements, income stream, are married, behave well in the interview, and have no criminal record, you will get into almost any coop regardless of the color of your skin. I have many non-white friends who got into coops and not a single one of them was ever denied.

Of course, I realize that discrimination based on marital status is illegal and many people in this discussion feel differently about inherited wealth. I didn't inherit a penny and paid for my education myself but I do not begrudge people one bit who inherited money as per the existing laws of the land or wealthy foreigners.

Lastly on a lighter note, I would love all coops to automatically convert to condos without any income tax impact so that people do not feel that there is discrimination in housing and more importantly my coop price goes up.

>> "I truly believe that if you have enough money as per coop requirements, income stream, are married, behave well in the interview, and have no criminal record, you will get into almost any coop regardless of the color of your skin."

LOL... I applaud your faith in humans. Sadly though, statistics strongly counter your belief.

>> "many people in this discussion feel differently about inherited wealth"

I don't think people are as concerned about the source of wealth as they are concerned about the ridiculous demands by some coops that basically ensure almost only those with "inherited wealth" can be considered.

@Joey42 It is all tangled up and confusing, but there are definitely multiple distinct issues going on that are all problematic (marital status, socioeconomic class, race, sexual orientation, etc.). Happy if NYC addressed any of these issues as they are all tied to coop boards having too much random power to do what they please, while facing zero consequences. A potential solution in the form of transparent, published requirements would cure most. Might as well pick a case that has the best chance of succeeding in court to get it done. Ruth Bader Ginsburg defended few male plaintiffs who were discriminated against "on the basis of sex", but in the end also brought greater equality for women.

@300_mercer
Laws of the land are mostly good at distinguishing good vs. bad, but not always. Slavery was legal at some point, women could not vote, etc. We need to continue to challenge things that are still not quite right, especially when there are non-transparent systems set up that obscure potential violations. Also, US is not the best country at economic mobility, despite perception to the contrary. See page 3, figure 2: https://www.brookings.edu/wp-content/uploads/2016/07/02_economic_mobility_sawhill_ch3.pdf

> "I truly believe that if you have enough money as per coop requirements, income stream, are married, behave well in the interview, and have no criminal record, you will get into almost any coop regardless of the color of your skin. I have many non-white friends who got into coops and not a single one of them was ever denied."
Race is likely a factor when used in combination with some other indicator of lower socioeconomic class. Also 1) some of those coop financial requirements are unnecessarily high (30%+ down plus million liquid, etc) resulting in "disparate impact" type discrimination 2) we do not even know what those coop financial requirements are, as they are not published, and everyone is just speculating.

> "I have many non-white friends who got into coops and not a single one of them was ever denied."
People that have been rejected by a coop are often not willing to share this embarrassing and potentially damaging fact. A real estate broker dropped me as a client after I disclosed that I have previously been rejected by a coop!

:-)
All I wanted was to get into that beautiful Sutton Place building that had crazy good amenities, low common charges, multiple walk in closets, only 7 minutes from work, a balcony, and was priced at like $800 per square foot. I don't even care if it ever gets converted because I would just never ever leave!
I eventually got into a wonderful building but with fewer amenities, no balcony, only one walk in closet, and 20 minutes to work, at a similar price per foot. Still happy now, but was pretty frustrated throughout the process.

Krolik,

Good article on social mobility. I wonder what the mobility will look like by $ amount moved and what percentage of top 1 or 2% in America by income (as a proxy for Manhattan coop buyers) moved from lower rungs. In the Scandinavian countries "rag to riches" may only mean $30k income to $100k income for the stratification used in the article. You can talk to people from developed European countries ex UK and it is very hard to accumulated wealth there as a professional (top 1% salaries more or less cap out at $250k) and in America you can. An easy example will be how many people in Paris can afford to buy a $3mm plus apartment from their own earnings vs Manhattan. In Manhattan, a big percentage of buyers are their own money. Keith can probably provide anecdotal information from his buyer pool.

From the article
"However, when making this comparison, it is important to note that the Americans who climb from bottom to top in one generation are climbing further in absolute dollars than their counterparts in Europe, given the broad income dispersion in the United States."

Krolik>> 10% would be a huge difference in price in my book if it were for the same product, especially considering how expensive NYC real estate is.

Meh,~10% is a rounding error to me when it comes to Manhattan RE. In the rental market, I’m just used to a much bigger distance between low and high pricing — sometimes as high as a factor of 2x for essentially the same thing — to say nothing of rent vs buy discrepancies.

Here is a proxy of rag to riches. If we use the second one as a rough proxy for Manhattan coop buyers as I have not found better data, 88% self-made.

https://www.forbes.com/sites/rachelsandler/2021/10/05/the-forbes-400-self-made-score-2021-from-silver-spooners-to-bootstrappers/?sh=7cd3a05930c2

"This year, only 118 people on The Forbes 400 scored a 1 through 5, which means that 70.5% of the list is self-made."

If we talk about only $1mm threshold:
https://www.businessnewsdaily.com/2871-how-most-millionaires-got-rich.html

"Further, a second study by Fidelity Investments found that 88% of all millionaires are self-made, meaning they did not inherit their wealth."

Wonder what similar data will look like for European countries who supposedly have more social mobility.

>> most of these "rights" do have a flip side which is a benefit

Clearly the market thinks the rights are worth more than the flip side. That’s why place you didn’t buy trades at $800 ppsf (or less). Or why the “normal requirements” coops trades at a 10% discount.

300>> Is Fed buying Jumbo private RMBS as well which is where presumably a lot of these jumbo non-agency loans end up?

I don’t think so. But I don’t think banks are doing 10% down on jumbos a whole lot either. The big jumbos I’ve seen seem to be in the range of 35% down at least. Sometimes I see them at 25%, and perhaps only once at 20%. But you probably know better.

Thanks. $10mm plus jumbos are likely to be in 35 percent plus range but you can get 25 percent on $3-4mm loan amount depending on your income and assets. This makes sense as the property prices are far more uncertain at the higher end.

Mortgages with 10 percent down typically have mortgage insurance even with agency compliant mortgage unless a govt program to help low income families.

"Thanks. $10mm plus jumbos are likely to be in 35 percent plus range but you can get 25 percent on $3-4mm loan amount depending on your income and assets. This makes sense as the property prices are far more uncertain at the higher end."
Gee, sounds a bit like Coop requirements.

30,

2008/9 changed it all. And agencies, whose mission is to promote home ownership and are effectively subsidized by the govt, require mortgage insurance for less than 20% down. People thinking 20% down should be max is off-base.

So if a Manhattan coop, with less than $5mm apartments wants min 25-30% down and min 2 years of mortgage and maintenance liquid, seems very reasonable. Most buyers I think would be fine with it if the requirements were to be just that rather than 100% of apartment value in liquid assets etc but in $500k-1.5 mm range where the rents tend to be expensive relative to buying, buyers usually have difficulty with 25-30% down and coops don't change the down payment requirement based on the $ value of apartment unfortunately. Good thing is that condo options continue to increase and there is Brooklyn with new lower floor condos even in low $1k per sq ft range close to transportation.

https://www.fdic.gov/resources/bankers/affordable-mortgage-lending-center/guide/part-1-docs/fannie-overview.pdf

I think Joey42, steve123, and Krolik all argued (in some sense) for 10% or 3.5% down as a fine standard because some condo or home purchases allow it. I guess my (our?) point is that those loans are coming with govt subsidies / insurance / asset requirements.

BTW, what are asset & income requirements on the 25% jumbos? How does that compare to 20% conforming loans? My gut tells me the differences explain the availability of the jumbos despite the lack of Freddie/Fannie.

@inonada - I do not argue for FHA 3.5% down as a mandated coop standard! Don't think I said that anywhere. I don't even think I'd push for 10%. I think the opaque structure where you can assume you need 30-50% of value in assets to buy, between down payment & liquidity puts a lot of buyers off even considering.

I think its pretty reasonable that something around 20% and actually having the requirements data public is a pretty neutral non-discriminatory line in the sand that could be drawn.

Further, I think most of these discussions about whether the rules are discriminatory or not are implicitly rather focussed on the "low end / starter" 1-2 BR ~ $2M & under range.

To @300 point, at that range the rent is pretty high relative to owning and so the years required to save up the incremental additional cash for coop vs condo down payment is what shifts people like me to overpaying for a condo (because I have no problem qualifying for a large loan / paying the monthlies, however it might be another 5 years to save for the much higher down payment / liquidity required for equivalent but cheaper coop).

Most people I know who are buying in the $3M+ range have had a few flips / such high income that savings rate is higher, or family money.. so assets are not as much of an issue.

Also to some degree I don't quite understand the counter argument here?

"The coop needs to insist on higher % down on more expensive apartments to protect itself"
but also
"Because of Fed/RMBS market/FHA cutoffs/etc, Banks require higher % down on more expensive apartments"
and also
"So the coops need to insist on rules above and beyond what the banks require"

Seems like, again, the banks.. with skin in the game, and professionals who review financial packages for a living instead of as a hobby after winning a popularity contest - kind of have the situation covered?

Banks have skin in the game? How?

NYC we are almost entirely talking about jumbo loans, which are kept on balance sheet more often than not post GFC?

To me a key difference between trusting what a bank thinks is prudent and trusting what a co-op thinks is prudent is that while banks may *think* they have skin in the game, we saw in 2008 -- they can't lose the game.

A co-op, however, can collapse under the weight of its financial problems.

Re why Banks still do not have long term (calls it >1y) skin in the game:

1. Non conforming jumbo loans (call it <2mm balance) also get securitized in Private Label securitization.
2. Banks can hedge on portfolio basis (remember Goldman Hedging with AIG) and sell Whole Loans off their balance sheets.
3. Banks have portfolio diversification of borrowers by amount, region and home type while the coops do not.
4. Banks expect to have some losses and have departments set up to handle the foreclosure process and coops do not.
5. Banks may have access to other assets of the borrower such as borrowers cash in the bank and private banking relationship.
6. Banks make revenues (loan spread, origination fee, securitization fee, servicing rights) from risk taking and coops do not.
7. Banks change the down payment on jumbos depending on market conditions.
8. Lastly banks do blow up.

9. And there is always a dumb lender out there.

Steve, I hear you on having stated that you think 20% is reasonable. But you had also said this:

>> Especially in an environment where a bank is happy to lend 30 year money at 3% against 10% down and 6 months payments in the bank..

I'm not sure what is reasonable precisely. However, I don't think banks are lending their money at 10% down and 6 months payments in the bank. They're not doing 20% either, per 300. They _might_ be doing 25%, but I look to others for clarification on the requirements that go alongside that.

Can anyone answer that? If I'm looking for $500K down on a $2M home, what are the income & asset requirements that would get me to the best interest rate? That's probably a better yardstick to compare coop requirements against, to the extent you think "reasonable" should be equivalent to what banks are willing to underwrite w/o govt guarantees. (Acknowledging FP & 300's posts may give reasons as to why this may not be the best yardstick.)

For $500k down $1.5k mm loan scenario market is not transparent and varies by lender and customer. But Wells will give the best rate if you keep $1mm in assets with them including brokerage account. Almost all banks want you to have at least $100k in cash with them for the best rate. Then there are special deals for some professions as in Law Firm partners who can get best rates without the asset requirements. Some banks want your salary transferred to a bank account with them as well to get the best rates. DTI is tough as some banks factor in only 50 percent of bonus or average 3 years of bonus rather than current income but including 3 years of average bonus, DTI (calculated on pre tax income) can be 35 percent. If you have plenty of liquid assets as in 3x the value of loan in your brokerage, private bank will even do 20 percent down or structure as margin loan cum mortgage. So no clear answer.

Separately, lower value apartment in a coop which also have larger more expensive apartments seem to cause the most angst in buyers. Lower value apartment buyers are younger and have not accumulated much assets yet and they get judged by the same standard as larger value apartment buyers who tend to be older. So if I were to make a legal case against coops about discrimination, it is effectively age discrimination due to high liquidity requirements.

>> For $500k down $1.5k mm loan scenario market is not transparent and varies by lender and customer.

Sounds just like a coop then! Seriously, if you need $1M in assets to get 25% down with competitive rates on a $1.5M loan, coops don’t seem to be that out of line relative to what banks do w/o a govt guarantee to underwrite it. And I think DTI on conforming can be 45%, vs the 35% you quoted.

Not saying whether or not the “bank standard” should be the “coop standard”, but the bank standard sure seems similarly tight for what they actually take on.

Agree. You can get the above loan without the $1mm asset as well with just $200k liquidity which is not with the lender but it may cost you 50-75bps more than the best rate for private clients. The 50-75bps better rate is offered as a discount for customer relationship or financial strength. For new condos, developers may make arrangements with some lenders who will offer fair rates in return for being "preferred lender". Main point is a lack of transparent market once you go above the non-agency loan size. I think some other posters here may know more than me about the intricacies of the non-agency loan market.

@ inonada - yeah I think I was just contrasting high 30%+ coop requirements versus 3.5/10/20% bank requirements there, not that I expect coops to let in the 3.5% riff raff.

Anyway, I think reading between the lines on this & other threads is the industry veterans of this forum play in a different segment of the market than some of the non-industry posters :-).

On exact numbers - 3-5 years back I could get a 10% down loan @ Citizens on at least up to 1.7M property value.

Good read in coop to condo conversion.
https://www.mannpublications.com/mannreportmanagement/2019/04/01/co-op-to-condo-conversation/

I think we need clarify what we are talking about here, and what we are not talking about.

We are talking about random discrimination when buying an under 2M coop apartment, when buyers squarely can afford the purchase and can put 20% down + have money in the bank for mortgage and maintenance. This discrimination limits housing options for people, and results in cheaper and better located housing being only available to people with generational wealth, and an "expensive to be poor" problem for everyone else.

We are NOT talking about:
1) Very rich people problems, like buying ultra high end properties above 2M dollars.
2) Purchases by not creditworthy individuals (3% FHA loans, or even anything with less than 20% down) with "shaky financials"

Personally, partner and I bought property with a CONFORMING bank loan. As straightforward as it gets. Put 25% down (as required by the coop), had 3 years of mortgage/maintenance in the bank. Very low DTI as we are high income with no other debts.

Previously got denied a purchase at a similar price point in a Sutton Place coop where we were going to put 30% down (as required by the coop), and have 2 years mortgage and maintenance in the bank. Unmarried couple, one person is brown the other is white, no family money. Both highly educated, with good tech/consulting/banking/lawyer type W2 jobs. This turndown was very frustrating.

@Krolik thanks for refocusing the conversation here, I am in the same market segment/demographic except married and went to Brooklyn for a condo.

Krolik, Did no one advice you against applying jointly with your un-married partner to a Sutton Place coop? Or was the price so attractive that you still wanted to give it a shot despite what people said and break new ground?

"We are talking about random discrimination". Very little randomness here even though it is still discrimination.

Krolik, not to discount your experience but I’ve heard worse. Not sure why you think this is limited to your specific corner or is a “generational wealth” / systemic problem. It seems deeper than that. I’ve heard of other circumstances similar to yours. But the one that takes the cake are some friends who were rejected ~15 years ago from some coop or other. They ended up at 15 CPW back when it was the be-all building, at some 8-figure purchase price for a sprawling apt at 65% down. Likely didn’t pay full cash not because they didn’t have it, but because of whatever. So fully qualified for the coop financially, just rejected for “random” reasons. They thought it was because they were the wrong shade of white. Not because of their lack of generational wealth.

Condition can be an issue in asset requirements too. I had buyers who would have been a good fit (for commute reasons) for a particular Greenwich Village 2/2, but the board wasn't looking at any buyers who didn't have $1mm liquid post-purchase, their stated reason being that they thought that any purchaser would spend substantial sums on renovating the estate condition apartment. My clients, not having those kinds of renovation funds, bought a condo in Brooklyn.

@300_mercer
Could have been a factor, but we did not hear from anyone about the unmarried aspect (though I have seen a 90s movie about it - "Greencard"), probably because that would be illegal, and brokers like to act/pretend like there is nothing illegal going on. Main concern from brokers in Sutton Place building was the size of our bank account. Real reason for rejection? No one knows, which is the main problem with the system. Maybe the reasons are not financial and brokers are unknowingly steering perfectly qualified married couples away from affordable units that are right for them based on something that is not even a real decision factor. Entirely plausible judging by the number of rejected applications - brokers might be solving for the wrong thing due to lack of information.

The main reason we wanted to purchase at that building was the location - 5 to 10 minute walking commute for both people, and price point that was easily affordable for us. And the reason I applied there was that... I could not imagine that we could be turned down in 2021 by a coop!!! This really came as a shock.

I studied the list of past transactions in the building. While most buyers were older, likely with higher savings (but probably lower income), there were some people that bought similar units in the building that career-wise looked similar to us. However, upon further examination, such buyers were likely connected to board members in some way (I spotted some relatives and one person that was likely a colleague/subordinate of one of the board members). Also, these similar-looking buyers were of the right skin color and might have had family money in addition to their careers. I did not spot any approved brown shareholders, period, only white or Asian. Most people on the board were very old and most had generational wealth. This was the same building where a board member talked about her son when she interviewed my friend.

@Ali
The particular apartment where we got rejected was in a condition that could benefit from, but did not require a renovation. In another Sutton Place building, we tried bidding on an apartment in poor condition and got the message that the board would expect renovation plans to be submitted alongside other board materials, with money set aside, which is consistent with your Greenwich Village example. Even then, does it really cost 1M to renovate a 2/2? I have gotten quotes on one apartment in estate condition where every single thing had to be redone, and none exceeded 300k.

@ionada
I am sympathetic to all discrimination causes as well, just think there is now noise and confusion in this thread when people start talking about very large price tag and mortgages, and what down payment is required on those loans (which is higher than a conforming loan down payment on cheaper units). More expensive luxury units in the city have lower cap rates, and are less liquid. The demand for these units is driven less by the middle class, and more by some other factors that influence how well very rich people's portfolios are doing.
An under 2M unit in Manhattan, with price per sq ft around $1000 and about 3.5% cap rate, is very liquid as a purchase or as a rental, and does not have the same risk profile as an ultra luxury apartment. In addition, don't forget that a coop has a more senior claim than a bank in case of a default. Therefore, I think a 20 to 25% down payment and 2-3 years of maintenance and mortgage is a plenty conservative standard for non-luxury units, and anything stricter than that is an arbitrary rule set by people that want to hand-pick neighbors from highest socioeconomic classes.

>>Anyway, I think reading between the lines on this & other threads is the industry veterans of this forum play in a different segment of the market than some of the non-industry posters :-).

Definitely true. In addition, I think that brokers are incentivized to make it work for buyers and sellers within the constraints of the current system. Plus, they are exposed to the peculiarities of NYC RE every day, so they are a bit de-sensitized.

>>I am in the same market segment/demographic except married and went to Brooklyn for a condo.

Was Brooklyn your preferred location, or did you go there because you did not want to deal with unreasonable coop boards?

Krolik, How many unmarried people buying jointly did you find in that Sutton place coop?

No idea - how would I know who is married and who is not (other than looking at their tax returns)? Looking people up on linked in does not help nowadays as a lot of professional women do not change last names.

Street easy: where people make derogatory comments (and making assumptions about them baselessly) regarding people based solely on their occupation in the the middle of a discussion about discrimination.

I think it shows the really sad state of affairs we're in when people argue for marital status as a basis for housing discrimination. This is illegal in NYC, yet we brush past it like it's nothing significant.

Although this conversation has been steered in other directions, the crux is the discriminative practices of coops. Denial - whether implicitly or explicitly - based on race, religion, ethnicity, national origin, sexual orientation and marital status, is illegal in NYC. Yet Coops routinely practice these and we have people here defending such practices.

Ultimately, what we're arguing against here is the opaque structure of coops. Literally, one Coop Board Member can say "I just don't like her" or "I can't explain it, but I have a bad feeling about him" and the applicant is toast. Toast with no explanation whatsoever, because it's an unspoken knowledge that most coop denials are based on factors that are illegal (often outright racist).

But hey, you can keep denying the obvious and concocting ways to defend unfair practices. Those who benefit from the status quo never see reason to change it.

Let me state again that I'm not defending discrimination here! Years ago, I purchased a co-op Downtown as an unmarried co-purchaser; it was a pain in the tail, and I would certainly not wish it on anyone else. Now I build battleships of paper documents to help purchasers, some of whom are members of protected classes, into restrictive co-ops, and they hate the process and would not wish it on anyone else.

But 1) a great deal of the process is transparent, not opaque (to name two buildings right off the top of my head, Astor Court will come right out and tell you how high their post-closing requirements are, as will the Vermeer) and 2) there is a long leap from hating that process to destroying it completely (though, along with 300, I would probably benefit economically if you did) .

Speaking of concocting ways to defend unfair practices, I have a kid in the NYC public schools, and the citywide parent body is convulsing over the idea of the elimination of the Gifted and Talented program, and the idea of the elimination of the Specialized High Schools program. I think a lot of what we talk about when we talk about the idea of "eliminating discrimination" is about resource distribution, and if resources are so scarce that the upper middle class is going to simultaneously hoard them and vituperate each other over hoarding them, well then maybe we need to just create more resources.

In other words, build, baby, build. Let's see what NYC would look like with thousands more co-ops.

You mean "condos"?

@Ali I think you, me and 300 would not benefit all that much from lifting the restrictions, because our coops are not the very discriminatory kind to begin with, and therefore these units do not trade at a steep discount. I think most non-discriminatory coops trade quite efficiently, with a discount directly in proportion to the size of the coop mortgage.

Also, I don't think creation of more Sutton Place coops going to help certain folks get into one. I think all it would do is increase the size of the discount vs. equivalent condos and non-discriminatory coops as market becomes flooded with these discrimination units and sellers have to compete more intensely for wealthy white married buyers that tick all the privelege boxes. It is not like the boards care that these units are sometimes on the market for years...

I know from the comps that my coop will easily go up 15% in price if it miraculously changed to a condo. There is very little supply of new condos around me and the market in Greenwich village is generally tight. But coop to condo conversion is a pipe dream due to income tax due on conversion from coop shares to real property in a condo and individuals having to pay mortgage tax on their mortgage.

Main restrictions in my coop are no LLCs, 20% down, and 2 year of reserves, and buyers should be planning to actually live in my coop even though we will allow 2 year rental with renewal at board's discretion at a time. I helped make this transparent along with a couple of other board members. This generally takes out foreign and out of town resident buyers even though we would probably say yes to them as well if they made a reasonable personal use case. However, we tend to get local buyers in strong financial position as most of the apartments in our building are large. We have never rejected any buyer. I guess the selling brokers always have done a good job knowing that it is coop not condo and coop board has a right to reject.

Joey42,
Please point out where people have defended "Denial based on race, religion, ethnicity, national origin, sexual orientation and marital status." I've seen people make contorted claims that anything above what they personally can handle financially must fall into those categories while at the same time holding that the financial criteria which would rule out over 200 million people in this country is "reasonable."

Let's say you had a building which was built in 1960 (when 2 Br was $18,000; and that was the annual salary of more than just the "very rich" in NYC) and was 100% cash for 30 years, then 50%, then 40%. They've not been known as a particularly "discriminatory" building. Yet this thread would have one believe they instituted the 40% cash requirement solely as a means of discrimination against protected classes. And I'm saying I don't buy that argument. If people want to argue about getting rid of the Business Judgement Rule I won't argue because if you add up the sum total of everyone else on this forum it probably wouldn't reach the amount of bad treatment I've received from Coop Boards using that excuse over the past 40 years. So I'm not defending bad behavior by Coop Boards. What I'm talking about is people drawing lines of "reasonability" that are convenient while ignoring the realities of what Coops are, what the current law is, what the vast majority of people who own Coops want, what the ramifications of outlawing "Business Judgement" would entail, why (even aside from tax consequences) in the 30 years since "going condo" was proposed almost no one has done it (and much more simply voting to become a "Coop with Condo Rules" which again has been done close to zero times), etc, etc.

>> "Krolik, Did no one advice you against applying jointly with your un-married partner to a Sutton Place coop?"

30yrs_RE_20_in_REO did you miss that? And the barrage of not-so-subtle cosigning of discriminative coop practices shrouded under the guise of 'fiscal necessity' lacing this thread. It seems you so badly want to discount the truth of those disenfranchised by these untoward practices that you'll seek every other reason but the clear reason, to explain why a particularly demographic is systematically shut out. At least that's what I've been getting from your arguments. Nevertheless, I'm honestly not here to convince anyone, because again, those who feel it know it and those who benefit from the status quo will never see anything wrong with it.

I’ve got nothing to gain from coops one way or another. I rent, and coops are never on my radar as interesting options (perhaps seen 2 coops listings vs 100+ others in my time here). The best proposal I’ve heard here is 300’s, to make financial requirements transparent.

Krolik’s rejection seems to be on financial grounds, on the face of it. That’s what the brokers were saying from the get-go: “the size of our bank account”. Maybe there was something else, I dunno. But I’ve been around here long enough to realize that one person’s prudent financial decisions is another person’s reckless financial decisions. 20% down with 2 years reserves may seem prudent enough to some, but others may view it as overly leveraged.

Thank you Nada. Transparency of financial requirements will go a long way to ensure that coops can’t hide behind financial reasons for rejection.

100% - the only thing we can all reasonably agree on is transparent financial requirement disclosure.
Once that's done it can show up as a filter in tools like streeteasy, saving everyone a lot of heartache.

That said - the suggestion up thread that someone should have told the buyer about the marital status discrimination in advance is in effect a defense of the discrimination. Clearly there is tribal knowledge in the industry of which buildings do which types of discrimination, even if its only 5% of buildings.

Martial status discrimination is different from unmarried people buying JOINTLY and qualifying financially based on joint income/assets. There is a state law against the former but the law is murky on the second. However, it is commonly known that many if not most stuffy coops discriminate against the second situation (my coop will not). I am not defending that but stating the facts in the context that buyers should be aware and save themselves pain and not blame requirement for generation wealth.

If some one, who qualifies based on financial criteria of the coop they are applying to, were to apply in their name only and clearly state that their partner lives them, I think most coops including stuffy coops may not say no.

A tangential but interesting article. I am not sure whether all old buildings comply with ADA act (many elevators doors can't even take a standard wheel chair etc). So there are laws, common practices, lawsuits, and enforcement.

https://www.nytimes.com/2021/07/21/magazine/americans-with-disabilities-act.html

Then I remember a case of man in wheel chair, who could walk, but was shaking down multiple businesses in NYC for accessibility.

Evidently, if you earned a half-billion dollars playing catch before age 40, you can get by the board no matter the skin pigment.

https://nypost.com/2022/01/10/a-rod-buys-9-9m-co-op-after-begging-for-boards-approval/

Just to add some real world experience with my company. I think we're sneaking up on a billion dollars worth of transactions, certainly a lot of them Co-ops. It's been about 13 years, and to date we've had three board turndowns. Last year we did over 60 transactions, not 100% sure what percent were co-ops, but certainly a lot. We had one turn down in a Lincoln square building, did a little snooping and discovered it was indeed purchase price. We Re-submitted with a revised purchase price, and voila, we received approval and they are currently living in their new home.

We actually worked with these clients for approx 4 years, they really wanted this home. Glad we were able to make it happen. But it would have been really nice if the board would have just given us some indication this was the issue. All we received was a turn down post application being submitted. Again, in my experience all turn downs have come after the application was submitted and prior to a board interview.

What I call the Park avenue corridor along with Sutton Place, we've had a number of no-go's just based on the offer. When this happens, and it happened recently, we will put together a mini financial package and request the listing agents review it and also try to get it in front of the board's treasurer or president to review. We do this when we feel very strongly the clients are financially qualified, however, the listing agents are telling us otherwise. This has worked for us about 50% of the time, meaning we got the thumbs up to move forward. Most recently it didn't work for us, and this was extremely frustrating because these particular buyers were not only wonderful people, but beyond financially qualified, including the fact they were cash buyers.

Again, in my experience, 99% of board 'interviews' are more like social occasions, a sort of welcome to the building once they've approved your board package. We've never heard of anyone being heavily interrogated at a board meeting, The tough questions generally come after the board package has been submitted and is being reviewed. And I certainly have quite a few funny stories of buyers showing up in business attire for interviews, and the person interviewing them in sweatpants letting them know he had to run as he was doing laundry.

It would be interesting to hear posters experiences with their board interviews.

Sutton Place and a handful of other co-ops, are an entirely different animal from the majority of buildings most will have experiences in.

But the system, regarding co-ops, as it stands is certainly ripe for all sorts of shenanigans.

I'm a bit jet lagged... Hopefully this is coherent : )

Keith Burkhardt
TBG

IMO publishing the financial requirements is a step forward, but it doesn't absolutely cure the issue. I mean, coops can reasonably argue that they already do this, in fact, since they state their downpayment requirements. I get that people are referring to the other murky part - how much post-closing liquidity is required. This helps, but it doesn't solve the underlying issue, which is the tendency for cloaked discrimination.

I'm not sold on the reason why coops require much higher downpayments (and post-closing liquidity) than Banks. I think the assumption made by a few in this thread is that the "riffraffs" who struggle with coming up with 20% downpayment and 5yrs post-closing liquidity are trying to buy coops of a few hundred thousand dollars (e.g.$500K, in which case $100K downpayment is required to meet the 20% burden). But what about coops that cost about $2mil, for instance? 20% downpayment means $400k, 50% downpayment means $1mil. I've seen coops requiring 80% DP and some even only considering all-cash applicants. How many people without the benefit of generational wealth can afford that? And it's not enough to label them "stuffy coops", call them what they are - bastions of systemic discrimination.

The fundamental idea behind home ownership is that the downpayment burden shouldn't be so onerous that only a very privileged few can afford it. Otherwise, it becomes cloaked discrimination. By cloaked discrimination, I mean placing a demand that on the surface seems ordinary - even if obnoxious - while in truth, effectively shuts out an entire demographic (race, for instance). So it's not enough that coops publish their financial requirements; to eliminate opportunities for discrimination, extreme financial requirements should be barred by law. We already do this for rentals and security deposits. Imagine if a rental building only considered applicants who can put down one year's worth of rent as security deposit. How many people would be shut out of the rental market unless they had help somehow (generational wealth)?

Again, America doesn't quite have that 'sophisticated' distinction between class and race; in our clime, they are generally one and the same. The history of our country has ensured that a particular group got centuries of a head-start. Now requiring everyone else to play at the same level is not equitable, it's discriminatory.

@joey I personally think, and hold myself to this standard, if I could only afford to come up with a downpayment for a home that is 5% or less, after years of saving, without adequate reserves, I don't think home ownership would be right for me.

As mentioned above, I find many things about the co-op process frustrating. However, for the most part, I think if you have the dough, you get in. When a Park Ave co-op says no financing, 2x , they just want their neighbors to be rich like them.

Sutton place example: WE submitted the board package on behalf of what we all felt were very qualified buyers. After 3 weeks of silence, we started poking around, now it's 4 weeks, poking some more with a bit more urgency, explain timelines etc, on the fifth week we turned up the heat and a few days later....."we regret to inform you...."

Delist, then relist a few months later. Another couple, they seem almost identical in every way to the previous buyers, although now we have reduced the home pretty significantly, sellers have moved out of state. Approved! Why??? That is classic Sutton Place, who knows what the hell these folks are thinking half the time??? And yes, we did a thorough check of buyers 1 to see if anything 'weird' popped up.

Was anyone crying for Madge when the San Remo rejected her : )

I know this takes things in a different direction, what are your thoughts on co-ops rejecting celebs?

https://www.nytimes.com/1985/07/19/nyregion/san-remo-co-op-board-rejects-madonna-s-bid.html#:~:text=The%20cooperative%20board%20of%20the,between%2074th%20and%2075th%20Streets.

Homeownership for all!! 2008 is long forgotten now. FNMA/FRE discriminate as they have a loan cap. How dare they not provide a loan which will be suitable for $2mm home / coop buyer with 20% down? Damn I want a $7mm condo but I am afraid govt is not forcing the banks to give me even a 25% down mortgage. Must be because I am not the right color.

>>"However, for the most part, I think if you have the dough, you get in."

@theburkhardtgroup the experience of a lot of Black and Brown people does not support this assumption. I know some people are quick to think any time issues of race are being pointed out, people are just "playing the race card", but the reality for many people is anything but.

Of course, not all coops engage in these discriminatory practices that we've been pointing out, but enough do to create the result that most desirable (and affordable) coops in Manhattan are still racially near-homogeneous. I think to deny that fact is to choose to be willfully negligent.

@300_mercer LOL... Of course, for someone who thinks that discrimination based on marital status is justified (not to mention other forms of discrimination that you suggestively support), your sarcasm is not surprising. Aren't you one of those people whose entire livelihood depends on the perpetuation of these discriminatory practices? Yeah, ok we get it. You need to fight for your purse. LOL.

>> ionada: Krolik’s rejection seems to be on financial grounds, on the face of it. That’s what the brokers were saying from the get-go: “the size of our bank account”. Maybe there was something else, I dunno. But I’ve been around here long enough to realize that one person’s prudent financial decisions is another person’s reckless financial decisions. 20% down with 2 years reserves may seem prudent enough to some, but others may view it as overly leveraged.

If you think this was definitely financial reasons, then I think you are missing the point.

1) Brokers are professionals subject to and well-versed in housing anti-discrimination laws. They do not have the business judgement rule to hide behind. Therefore, even if they become aware of discriminatory practices of a building, they cannot talk about it with buyers, and have to always point to financial requirements as the only criteria they are aware of. On the other hand, boards are volunteers likely with no such training, and are able to hide behind the business judgement rule, as well as management, so they do what they want in the end.

2) Overly burdensome requirements do effectively discriminate in favor of family wealth.
In my case we had 30% + 2 years of liquidity, consistent with requirements. A pretty large sum of money. On top, we had high credit scores, no other debts (all student debt paid off in the prior year), and very high income. We had to submit 2019 tax returns, and even based on that, the apartment was less than 3x gross income. Also, employer salary letters were showing that the current comp was 1.5x that in 2019.
Like Keith said above: >> "When a Park Ave co-op says no financing, 2x , they just want their neighbors to be rich like them."

BTW @keith we kind of discussed above that no one in this thread is advocating for coops to allow purchases with less than 20% down...

I agree Joey, In the general sense. But I think New York city's a very liberal town. And if you've got the money, and what it takes to have made that money, co-ops are not going to be an issue for you.... MOST of the time. I'm not sure if this applies to other large cities in the US, but I think it does in New York City.

50% down keeps the hoi polloi out.

Then I remember reading this. We haven't talked about appraisals and lending /discrimination.

https://www.cnn.com/2021/12/09/business/black-homeowners-appraisal-discrimination-lawsuit/index.html

> "Aren't you one of those people whose entire livelihood depends on the perpetuation of these discriminatory practices?"
Exactly the opposite. I get richer if all coops have condo like approval. Of course, screaming discrimination is the latest fashion. Damn I want a govt rule to force FNMA/FRE to finance me 20% down on a $7mm condo. Why the stupid loan caps? Discrimination is rampant!!

And please no one on the board give me any facts which goes against my above belief!!

>> If you think this was definitely financial reasons, then I think you are missing the point.

I don’t definitely think it was financial reasons, hence the “I dunno”. I’m just saying it could have been financial, and that what you consider “plenty” vs others might be different. Not to remove the possibility of your alleged discrimination.

Perhaps it’s best to get rid of coop board approvals and rental restrictions altogether. The FHA is willing to lend with 3.5% down, and the program skews towards minorities. Requirements beyond FHA can therefore be considered discriminatory. Furthermore, rental restrictions remove housing stock from renters, who skew minority and tend not to have family / generational wealth. We should perhaps consider that discriminatory as well. Anyone who buys into a coop with financial requirements beyond what FHA requires, or restricts rentals, perpetrates such discrimination.

Case-in-point: I rent, am a member of a minority who faces discrimination, and have no generational wealth. Despite being in a city where coops equal/outnumber condos, I rarely see any coop rentals offered. Of the two I ever saw in person, compared to 100+ condos, I put in an offer on one. The offer was declined because the owner was worried I might leave after a year to “go back to my country” (per the broker). Whaaattt??? This is my country!

So, coop rules should perhaps be changed to “If you want to rent your apt, it will be to the first person at the door demonstrating an income of 40x monthly rent, or 27.5x monthly rent with backing from Insurent.” Perhaps there should even be mandates requiring rental of unoccupied apt at mandated rents, to ensure the housing stock does not go to waste.

I know it's not funny, Nada, but your post gave me a good belly laugh. Many years ago I was in Eastern Europe, In a very small village, deep in eastern Germany. The village was known for its buckets, they gave me one as a gift. The kids in this sort of squat. I was staying in reminisced about the good old days, when every day they went into work and made buckets. So I asked them who they were selling all these buckets to? He said not really anyone, at the end of the day another crew comes in and melts them all back down.

True story.

Okay, I'm also going to blame this post on jet lag.

Eastern Germany not Eastern Europe....

Just like the Soviet workers’ saying: “We pretend to work, and they pretend to pay.”

Re: celebrities buying Coops and specifically Madonna, someone in my office was showing her apartments and on the way out of one the elevator door opened and one out of her bodyguards stuck his arm out preventing an owner in the building from getting on saying "take the next one." Was that Coop wrong to "pre-reject" her even before she made an offer (even though she was financially qualified)? She went on to buy adjacent townhouses and illegally paint the curb and put up No Parking signs to commandeer the street in front.
https://www.tmz.com/2016/03/24/madonna-no-parking-signs-new-york-city/

Supposedly A-Rod was banned from renting at 15 CPW after having too many hookers to his prior rental there. Is it inconceivable that a Coop would look at that if he were trying to purchase? He's also a serial flipper. If being rejected for that is illegal then I'm due plenty.

Let's say an applicant was a famous war reporter and made it clear he would be traveling often and when gone would be letting his network of war reporter buddies use the unit because that's a common practice among war reporters. Was the Coop wrong to reject even though he was financially qualified because they didn't want a parade of unaccountable, unidentified, notoriously rowdy occupants disturbing other units?

>> The offer was declined because the owner was worried I might leave after a year to “go back to my country” (per the broker). Whaaattt??? This is my country!

Haha, when our neighbor met us for the first time, he kept asking my partner (who was born in the US!), "No, but where are you really from?"
Luckily, we were already shareholders by then, and this neighbor was not on the board.

@theburkhardtgroup if you tie the apple high up enough on the tree, the medium-height man will not be able to reach it. Tying the apple to the tree is not the problem, where you tie it is.

NYC is liberal, but it's not really as racially-embracing as you'd like to think. Many otherwise 'pleasant' people have invisible lines that they draw. Cool to hang with, but don't need to live next to. There is a generation shift that's slowly changing things, but as of now, the older New Yorkers who disproportionately outnumber anyone else in the coops, man the gates.

I lived in a Condo for many years. I remember going to get my mail one day and some new resident looked at me and plain-faced asked: "where do YOU porters stay?" When I looked puzzled, she repeated: "Where do you porters stay? I mean, do you have a break room or something?" The cheapest unit in my Condo back then cost about $1.5mil. My unit was on the larger end and an end unit. So you can deduce I didn't purchase it with food stamps. Yet, I was deemed a porter, while getting mail from my mailbox. This was a little over a decade ago. I was in jeans and house sandals, getting my mail out of my mailbox in a building where every single worker wore uniforms, but this woman saw me and all she saw was a "porter". Yes. Here. In NYC. I could regal you with tons of stories.

So, no these issues we point out are not figments of the imagination. I've had a coop owner tell a Black friend that was trying to buy his unit that he "just knew" the board wouldn't approve him. My friend is a Wall St. 'vet', has made mid 6 figures for years, Ivy league grad, met the financial requirements (the unit cost just about $600k), yet this owner "just knew" the Board wouldn't approve him. He kept moving that apple higher up the tree, suggesting that the Board would like to see a personal bank account with 7 figures (yes, SEVEN) to approve him for a coop that cost 600k! So the owner never advanced his application, instead preferring to send (you guessed right) a white guy who eventually got turned down by the board because he couldn't provide proof of stated financials. Oh, he didn't need to show a 7-figure bank account either. We found out all this backend info from someone intimately close to the process. Again, this happened here - right here in 'liberal' NYC.

These are not isolated cases. It's my demographic, so we end up trading stories. While the one up there who panders to these Boards, eager to get whatever crumbs he can get in agent fees no matter if he has to aid and abet discrimination in the process, turns up his nose at the truth, these are real stories, of real people, who experienced real discrimination and have to deal with the consequent real emotional trauma.

So, no, my good sir, NYC is liberal... but not THAT liberal. Not yet.

@joey this could lead to a very good conversation on white liberalism in America over the last hundred years. If you ever need a broker, hit me up, we have a slightly different approach to the real estate business here in New York. And welcome to the forum.

Keith Burkhardt
www.Theburkhardtgroup.com

30, Good story on Madonna.

Would people call "AIR" designation in SOHO buildings discriminatory?

We have laws in place to prevent discrimination. The difficult part is changing people's hearts, you can't legislate that, and you can't easily see what's in there.

The bottom line is, co-ops are essentially similar to country clubs. Ultimately, they decide who they're going to let in, the big question is should this be permissible relative to housing? It's really just a very thorny question.

I would agree that keeping somebody out like Madonna, based on celebrity, and the potential nuisance someone like this could create for the building is fair game.

Ultimately, if you feel you've been prevented from moving into a building because you were illegally discriminated against, you need to take those parties to task. It has been done successfully in the past.

I worked for a company called JI Sopher beginning in 1989. they had been caught discriminating, quite honestly I don't remember all the details. But for every deal we did, we had to fill out a form with all the details of the client including their race. I believe David would have more recollection of this, as he was managing one of the offices.

So Joey42 now says it's the older Coop owners who are the racists. Ageist much? In my last Coop on West 9th St there were several occasions where POC friends of my got asked what they were doing while waiting for an Uber/Lyft in the vestibule after leaving my apartment. And each time it was by one of the millennials, never one of us "old people." But sure am enjoying seeing people show their true colors.

LOL... 30yrs_RE_20_in_REO, you're trying too hard to deflect. Waaaaaaay too hard! It's not working though. I know you feel threatened by this issue being discussed, but hey.

Not that there's any confusion in my previous comment, but I'll say it again: the younger generation is generally more embracing of racial plurality than previous generations. This is not an assumption, it's a fact.

@theburkhardtgroup thanks man.

I know you're cool 30yrs, but the “worried about going back to your country” explanation DID come from a broker who is now 80+. That's my one datapoint, anyways ;).

Joey42, what do you think should be done about the issue? Changing hearts is great and all, but legislating has teeth.