what happens if a co-op can't refinance its mortgage?

Theoretically, the bank forecloses, sells the building at auction, and the shareholders become tenants of the new owner. I'd think the bank would extend rather than do that, but there have been foreclosures of small (e.g., rowhouse) co-ops in recent years. Quite a few went bust in the '30s.

I'm not sure I understand your hypothetical. If the coop can't refi and has to increase its monthly payments, then the board will increase maintenance accordingly. If any shareholder defaults on the increased payments, the coop can seek to take their apartment essentially. There are many steps before the coop would go into default. "Older owners" don't have to be convinced of anything--maintenance increases are not put to votes of the shareholders. They are set by the board. If the board decides to go into default, that's a messed up board.

I think EEEE1's scenario was the co-op being unable to either (1) pay off the principal or (2) refinance, when the mortgage comes due. It's apparently the common interest-only mortgage.

So, kyle, the board would just assess everybody their share of the mortgage, right? Same deal, no shareholder approval required.

EEEE1 - why do you think the coop won't be able to refinance? The value of a building, if it is a large one, can be tens of millions of dollars. Most underlying coop mortgages are no more than a few million, if that. The extremely low loan-to-value, the strong colleratal (the coop itself), diversified risk (not one person is responsible for the entire mortgage really but rather shareholders through their maintenance payments) should make it an easy refinance. I've never seen a coop building unable to refinance it's underlying mortgage.

Perhaps they will refi at a much better rate and your mnt. will go down :)

I think he's talking a "what if the world as we know it collapses" hypothetical.