Shoring Up What Lies Beneath The Recession and Underlying Mortgages

Not so very long ago, pretty much any individual or corporate entity could get a loan quickly and easily, with only some cursory paperwork separating borrower from lender. The so-called subprime mortgage crisis put a stop to all that, and banks great and small suddenly threw on the brakes and heeded the advice of Polonius: “Neither a borrower nor a lender be.”

Unfortunately, this collective action paralyzed the markets, and for a while it seemed that only the bluest of bluebloods could get any kind of credit. Then the government stepped in, pumping vast amounts of taxpayer money into the system.

While banks seem to have remembered their primary function and are lending again, the halcyon days that encompassed most of the last 20 years are but a distant memory. Lenders are investing a lot more resources on risk assessment than they used to. This makes getting a mortgage of any kind a bit trickier: it requires more time, more paperwork, and more of a chance of the application being shot down.

Both co-ops and condos are big borrowers, historically. The latter take out loans to pay for upkeep, Local Law 11 maintenance, and whatever common area improvements need to be done. Condo association loans are a way to essentially space out a unit owner assessment. Co-ops have an even broader array of things to pay for, plus the physical collateral of the building itself and the land it sits on to entice a bank to make the loan.

How do co-ops and condos fit into the new landscape of loan refinancing? Glad you asked. Let’s take a look.

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