You've found your dream home at last. However, you don't have those hundreds of thousands stashed away
to pay for your new co-op or condo in cash. What do you do? Like most new home buyers, you apply for a mortgage. But as an individual you could drown in a sea of unfamiliar terms, little-known lenders and stringent bank requirements. That is why many co-op and condo buyers are turning to mortgage brokers to help them secure unit financing.
Until the interstate banking laws changed about ten years ago, says Neil Bader, chief executive officer of Skyscraper Mortgage Company, a mortgage brokerage firm that does about one out of every four co-op loans in New York City, only about two percent of buyers used mortgage brokers. Today, due to changes in the banking industry, more than 60 percent go through brokers.
The 1986 law that Bader refers to allowed banks to cross state lines and set up offices all over the country. As a result, it became too costly for banks to set up regional offices and do the community outreach that banks did in the old days. Instead, banks have turned to mortgage brokers to peddle loans for them. This has allowed many small, niche-market banks to become large co-op and condo lenders. But even so, the average consumer would probably not be famililar with many of them, even though they may offer the most competitive rates.
Obstacles to Financing