Take the Good with the Bad

FHA Mortgagee Letter 2009-19 dated June 12, 2009 has a few good things in it, and a few bad things. I'm not sure if overall it's good for the high rise condo market.

First, I'll mention the good stuff. First off, Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act regulation in 24 CFR 100. That is a major plus for the New York City market where all condos have the Right of First Refusal in the By-Laws. In fact, this has been one of the main reason there are so few NYC condos that are FHA approved. If this goes into effect, there will be an onslaught of condos that are approved.

Next there has been a change in ground up new construction condo approval, in cases where a building permit and a certificate of occupancy (or its equivalent) are issued by a local jurisdiction that performs a minimum of three inspections (typically the footing, framing and final) neither an Early Start Letter nor a HUD approved ten-year warranty plan is required. For those jurisdictions that do not issue a building permit (or its equivalent) prior to construction and a Certificate of Occupancy (or its equivalent) upon completion of construction, a condominium unit that is one year old or less must have either an Early Start Letter (with a minimum of three inspections by an FHA Roster Inspector) or be covered by a HUD-approved ten-year warranty plan (with a final inspection by a FHA Roster Inspector) to be eligible for high-ratio mortgage insurance.
All condominium types are eligible to follow this process (e.g. Multi-family). Projects are still required to be on the FHA-approved condominium list.

This may mean that New York City condos may be approved for the full boat of FHA financing. Any condos in the NYC market that have been applying for FHA approval have been requesting approval for 90% maximum financing due to the expense of the 10 year warranty on all of the units in the building required to go to 96.5% financing. When there are 200 units that warranty can get expensive.

And now for the bad. I'll start off easy with FHA will not accept a temporary Certificate of Occupancy; all units within the building
(where the specific unit that is security for the insured financing is located) must be complete. Developers usually want to start closing as soon as the Temporary Certificate of Occupancy (TCO) is issued. There is usually a significant delay between the TCO and the Certificate of Occupancy that could stretch longer than it should. Remember these are controlled by bureaucracies.

And here's the rub: Transfer of control of the Homeowners Association shall pass to the owners of units within the project no later than the earlier of the following:
1. 120 days after the date by which 75 percent of the units have been conveyed to the unit purchasers, or
2. One year after completion of the project evidence by the first conveyance to a unit purchaser. This means that the entire building needs to sell 51% and be turned over the Homeowners Association (HOA) within 1 year of the first sale. No pre-construction sales for buildings wanted to be FHA approved and with the current market sales velocity, it's hard to say whether a 300 unit condo tower is going to sell enough units in 12 months. This seems to be a deal killer and the builder's associations are fighting the whole mortgagee letter based on it.

It's too bad that we got the acceptance of the Right of First Refusal with this at the same time. We almost had something that saved the NYC condo market.

Preferred Lender in Bridgeview Tower

I've been the preferred lender in BridgeView Tower for awhile. It's a Brooklyn condo building with amazing Manhattan views.

To see the building's website click here
To check out a couple of listings in this building, click here

Culpepper v. Inland Mortgage Corp. YSP is still legal

The manner in which mortgage brokers are paid by lenders is called Yield Spread Premium. A ruling by the 11th Circuit Court of Appeals has reaffirmed its position in a 12-year-old legal battle that lender-paid fees to mortgage brokers are proper unless consumers can prove the amount is excessive.

Here's the court documents from the 1989 case.

Fed Rate to Stay the Same?

Some 20 economists recently surveyed by Securities Industry and Financial Markets Association, believe short-term rates will hold steady at 5.25% for the next seven quarters. Some of these same economists also believe oil is going to be at $50 a barrel next year. (currently $70 a barrel.)

Our Name on Toast

Recently I've been working on forming my own mortgage brokerage and real estate brokerage with my business partner. It's called The Metropolitan Group.

Check out our name on toast.

Get your name on toast at Your Name on Toast

Keep Your Life In Balance, Ethics Will Follow

A 2007 Deloitte and Touche USA LLP Ethics and Workplace survey shows a strong relationship between having an excellent life/work balance and positive ethical behavior. Additionally it showed that management and supervisors who offer positive reinforcement for ethical behavior have a major impact on their employees as well.

If you are dependent on your job for all of your psychological needs you may be leading yourself to a dangerous place regarding your self worth, and where you fit in the world at large. This can become especially dangerous and lead to unethical behavior with there is an ethical dilemma that has a major impact at work. Those whose entire lives are tied up into what the position on their business card reads, may not make the most ethical decision or take the most ethical action, if they think it will result in a negative at work.

There is also an interesting note on job dissatisfaction. The survey found that 60% of those surveyed believe that job dissatisfaction is a leading reason why people make unethical decisions at work.

AmTrust Mortgage Eyeballing Coop Loans

AmTrust Mortgage (formerly Ohio Savings Bank) is looking to make a play for the New York City cooperative mortgage market. They have been FNMA approved to lend against coops for a long time, but only recently decided to try to wrap their heads around getting into this line of lending.

They've hired a top dog who formed Citibank's coop lending and asked Jonathon Miller to push out some numbers on the size of the market (about 5 Billion USD), so perhaps they are getting comfortable with this property type.

Interesting for those of us who have been doing coop mortgages for years to see a lender making baby steps into this robust market.

Reverse Mortgages for Coops

Bank of New York Mortgage (owned by Everbank now since Chase and BNY did an asset swap) has introduced a jumbo reverse mortgage product for coops. They are one of 2 lenders offering this niche product. The other is Indymac's Financial Freedom (though I couldn't find any information about that on their site).

Tomorrow I attend a workshop about reverse mortgages on coops, so I will know more about them and how they work.

One thing that comes to my mind with these mortgages is: Is there really that much liquidity in the market that institutional investors are willing to just sit on a loan for x number of years without collecting any payments until the loan is due? That's incredible to me.

What 2007 is shaping up to be

The Cooperator has some ideas on what 2007 will bring. Only one surprise- housing prices will rise nationally while NYC housing prices decline. Seems that everyone here in New York City is expecting the good times to keep on roaring ahead, so this prediction by Davis Stiff, Fiserv’s chief economist, will come as a shock, and probably piss some people off.

For more on this check it out here.

1 BR Riverdale Coop for Sale

Check out the walk-through here.

Check out the listing here.

And of course, for financing on this purchase, click here.

Sun-filled Riverdale 1 Bedroom

Location: Riverdale

This delightful coop on the river side of Henry Hudson Parkway is on a high floor, offering gorgeous Riverdale views and lots of light from windows to the north and south. The Windsor offers a full time doorman, gym, parking, in-building laundry, outdoor swimming pool, storage, bike room and express bus service to the subway and the Metro North. The apartment offers many windows, a dining area, great closet space, windowed kitchen, a balcony facing south for all day sunlight in a quiet well maintained building. Southern & Northern Exposure for All Day Light
Balcony with Sweeping City Views Lots of Closet Space 24 Hour Doorman
Outdoor Swimming Pool In-Building Parking Available (no waiting list) Windowed Kitchen Dishwasher

Photo Gallery

Information

Contact Information

Jeffrey Loyd

212-582-9050

jeffrey@jeffreyloyd.com

Pricing

Asking Price: $220,000.00

Flexibility: Negotiable

Additional Pricing Information: 80% Financing$658 Maintenance (42% Deductible)

Homeowner Dues: $658

Property Location

4705 Henry Hudson Parkway
Bronx, NY 10471

Links

For Financing

My Blog

My Real Estate Site

Features

Bedrooms: 1

Bathrooms: 1

Parking: In-Building

Year Built: 1960s

Located on Floor #: 9

Floors in Bldg: 14

Square Footage: 700 approx

Agent Name: Jeffrey Loyd

Broker: Hydra Property Group

MLS #: 4705 Henry Hudson Parkway 9F

Attributes

Appliances

Range/Oven

Full Refrigerator

Dishwasher

Microwave

Building Amenities

Exercise Room

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Equal Housing Opportunity

VFLYER ID: 866308

Decade High On Default Rate

One thing that is a blessing about focusing on the Manhattan coop market is that the board approval process and the down payment requirements don't create a market for subprime mortgages. I've avoided the subprime market for this simple reason, and I'm glad when I read that the default rate has risen to 10% of the mortgages sold to investors. That's up from 6.62% according to a report by investment bank Friedman Billings Ramsey & Co. I saw this report in REALTOR Magazine's Daily News.