Contract holders unable to get mortgages increase in NYC

read the article. It is by no means widespread and even at "District" they found another buyer and the bldg is now 88% sold. keep screaming the sky is falling dco...you love it!

Cheetah779902- Silver lining. You know almost everyone thought, the TITANIC was unsinkable.

"I love her response. Their income shows they can afford the loan. Another Broker still in denial. I'm sure if you use the borrowing equation of say 70% of income. I still can't believe the attitude of Brokers."

So I assume you know the specifics of the buyers she was talking about? More unsubstantiated nonsense.

ccdevi- I know enough, that they can't get the mortgage. What else is there? What makes it worse, is that she is a mortgage expert and is confirming, getting a mortgage, is much harder to get, then she thought it would be. That's a story in itself.

I find her whole structural understanding of "afford" to be a bit disturbing.

People get mortgages because they can't afford (including opportunity cost) to pay cash. Mortgage issuance has rules. Rules change. For her to say that these are people who are able to afford those apartments, that the lending isn't based on qualifications, that it's a set of rules, indicates sleep deprivation or something.

"getting a mortgage, is much harder to get, then she thought it would be. That's a story in itself."

Thats a story? That might have been a story, I don't know, 8-10 months ago.

"What else is there?"

There are the particulars of why, and you know that. you just threw out baseless speculation that she was being incredibly lax in her borrowing equation.

alan her words were awkward but I think she simply meant that in her opinion these people could reasonably service these mortgages but that the mortgage rule/qualifications (I don't know why she differentiated there) have gotten over cautious. I suspect this is right, people overreact in a crisis.

Guys read the article, it is clearly forecasting a disastrous effect. I can't believe people can actually read this and find anything positive. My god people, take your heads out of the sand. The last line is that this is happening all over the city.

WOW. I'm still laughing at some of you people. Guys, the horse has left the barn.

The Default Phenomenon Comes to N.Y.
City Gets a Taste Of the Housing Slowdown
By CANDACE TAYLOR, Staff Reporter of the Sun | September 25, 2008
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Manhattan is getting an unwanted taste of South Florida. Developers of new condominiums are finding that apartments they thought had sold are unexpectedly coming back into their hands as buyers — not just layoff victims, but some who are wealthy and employed — default on contracts. In some cases, these supposed buyers are having to walk away from five- and six-figure deposits. This phenomenon, common in Florida and other real estate markets decimated by the housing slump, was virtually unheard of in New York City until recently.

"Inventory that's considered 100% sold out is now trickling back on the market," a mortgage broker at Commodore Mortgage Group, Andrea Costa, said. "Before, you had people lining up for these apartments. This is definitely new, especially for New York."

At 1 Hanson Place in Fort Greene, a family recently gave up its $70,000 down payment after the father became unemployed, according to Brian Huang of City Connections Realty, the firm that represented the buyer. A mortgage broker at the Thomas Funding Group, Thomas Wiggin, said one of his clients gave up a $75,000 down payment on an apartment in Brooklyn after finding that the financing he'd counted on is no longer available in the face of tighter lending restrictions. Many buyers of new-construction condominiums, where a year or more often goes by between the signing of contracts and closing, are facing the same problem, mortgage brokers say.

The resulting spike in inventory, combined with expected layoffs on Wall Street, could have far-reaching effects on the city's real estate market and the economy, including foreclosures and heavily discounted prices.

The senior vice president at Preferred Empire Mortgage Company, Jeffrey Appel, estimated that the number of buyers struggling or failing to close on signed contracts leapt to 10% from virtually nil in the past year. "From zero to 10% is a big difference," he said. "It's a growing problem."

Buildings where buyers are scrambling to close include some of the city's most luxurious new condominiums, including 101 Warren St. in TriBeCa, the Zinc Building on Greenwich Street, and DISTRICT on Ann Street, sources said.

"It's happening all over the city," Mr. Wiggin, said. "No building is immune."

A year ago, banks routinely allowed buyers to finance up to 90% of their home purchases, but now require a down payment of 20% or more, Mr. Wiggin said. Since mortgage contingencies usually last only a month, buyers who signed contracts more than a year ago are discovering at closing that they must come up with large sums of cash to make up the difference.

"If you got pre-approved a year or two ago, there's a 95% chance that your financing is no longer available," the chief executive of Manhattan Mortgage Co., Melissa Cohn, said. Because of the high cost of New York City housing — in Manhattan, the price of the average apartment now exceeds $1 million — an additional 10% of the purchase price is difficult to acquire on short notice, even for wealthy buyers. "What's amazing is that if you look at these people and their income, they're able to afford these apartments," Ms. Costa said. "The lending isn't based on qualifications — it's a set of rules because we got into this credit mess."

If buyers can't come up with the cash, they could lose an even larger amount on their deposit. "You could be walking away from $300,000 — that's not chump change," Ms. Costa said.

Buyers are increasingly using gifts from family members to help make up the difference, or looking for more creative ways of financing their purchase.

The president of RES Real Estate Services, Dogan Baruh, said he recently found a group of private investors to help a client come up with an additional 25% on a $900,000 TriBeCa condo after his original financing fell through. Before the deal worked out, "the client was almost ready to walk away from the purchase and lose his deposit," Mr. Baruh said. "It's almost better to lose $100,000 than to have to come up with an additional $200,000."

Several buyers at 101 Warren St. have negotiated with the developer, requesting more time to close, Benjamin McGrath, the chief financial officer of the building's developer, Edward J. Minskoff Equities, said. "We've had a couple who have had difficulty making it to the closing table, but they've all come through in the end," he said. The building, which has only one penthouse left for sale, has not yet closed all of its units.

The developer of DISTRICT, Joseph Klaynberg, said several buyers at the building entered into contracts with a 10% deposit, only to discover that they couldn't get financing for the remaining 90%. Since they pulled out of the deal very early on, the developer refunded their money, he said. The building is now 88% sold, he said, and closings are expected to begin soon.

Developers are not legally obligated to return deposits after a contract has been signed, according to real estate attorney Keith Schuman, who said he has several clients who likely will sue to recoup their deposits.

Buyers in danger of defaulting may find other parties to take over their contracts, but that's a difficult proposition in the current market, a broker at City Connections Realty, Brian Huang, said. The family who lost its down payment at 1 Hanson Place tried unsuccessfully to find another buyer, he said.

Meanwhile, those that haven't yet lost money are scrambling to avoid doing so.

"Brokers in buildings all across the city have people that are not closing," Mr. Wiggin said. "I get calls from people who say, 'I can't get financing. Can you help me?'"

This should make it easy.

Again, if you read carefully (as I do because I was misquoted in the press numerous times), it is actually nothing like South Florida and is not nearly widespread.

Again, if you look at the actual numbers, this is not likely to lead to distress in and of itself and your constant sky is falling analysis is still transparent.

who said there was anything positive in that article?

glad you're having a good time though

HAHAHA.... You guys are right, nothing to see hear, everything is OK.

DCO, it takes an awful lot of heads in the sand to create a bubble this big... so don't be surprised to see a few riding down the wave as well.

It sucks but it's not surprising. Lenders are tightening up their standards back to where they were before and buyers weren't expecting it.

The folks buying apts that are taking long to close (i.e. new construction condos or coops) are the ones at risk in this changing market.

How many units will be put back on the market in the next year because of inability to secure a loan? I guess the inventory will continue to increase and those development are going to have to adjust those percentage sold numbers a little lower. Lets see if that happens, after all they lied about the amount they sold, I assume they will just ignore it and hope no one will notice.

DCO, thank you for your chronic grammar errors and diction. I look forward to reading your posts, if anything for their creative spelling and flagrant use of punctuation. "You guys are right, nothing to see hear, everything is OK." Hear? Try 'here'. Tthe flagrent use of commas has got to stop. They are peppered through your sentences like ants on a watermelon. I have nothing against your content -- but I find it hard to take seriously sometimes when you clearly can't differentiate between "patients" and "patience", as shown in another recent post.

InkSpot- HAHAH. Thanks, for, the, advice, I'll, try, harder, from, now, on.

whats disturbing about this DCO is that fact you think it's funny and you are laughing. people are loosing thier life savings, thier dreams and u seem to be happy.

by the way what do you do for a living since you spend most of your day posting on this website ?

buynyc- What I find funny is that you would assume how I feel. Truth be told I will not shed a tear, for the people who cost this nation trillions and now wants the tax payers to bail them out .

I haven't worked in years. Just been lucky with investments I guess. And what does this have to do with anything.

hmmm, dco doesn't need to work anymore? After hearing that news, I'm beginning to take him more seriously than ever before. Should I take investment advice from people who need jobs?