Rich Bouchner New York City Real Estate

As many New Yorker's know, buying a coop in New York City can be a strange and mysterious process. In my time as a New York City real estate broker, I have seen coops that require 50% down, others that don't allow renting, while still others have rules too arcane to even fathom. Most coops however are fairly easy to navigate. As long as a potential buyer has good income, credit and assets, (and is not an ax murderer!!) most NYC coop boards will green light an application. Hoverer, if a board decides to reject a potential buyer, they may do so (as long it is not for race, religion, creed, etc) , and they are not required to state a reason.

For those interested in learning more about coop purchases, please click here to go to Commodore's coop page on our web site, or feel free to call me at 646.825.5734.

My friend at the Real Deal, Candace Taylor, writes in the Sept issue about some of the more high end New York City coops and how tough it can be to gain admittance to them. Here is a link to her article: Breaking the Co-Op Barrier

Enjoy, and please share your thoughts and/or experiences with the New York coop experience!!

The New York Observer ran a story reporting that New York City landlords are not offering as many incentives to renters as they had been just a couple of months ago. I am here to report that I have seen this first hand.

During the spring, I was invited to go to Cambridge and speak to third year Harvard Law School students about the New York Real Estate market and what is takes to buy or rent in the city. As a result, I have ben working with a dozen or so recent grads to help them find apartments in New York. While most of them will be working for law firms that are located in mid-town or on Wall Street, I have spent time all over the City with them looking at apartments: on the Upper Easts Side looking at doorman full service buildings, the Upper West Side looking at pre-war buildings, and Greenwich Village and SOHO looking at walk ups. I usually work with buyers, so the last couple of weeks have been a change of pace for me. Besides moving more quickly than a purchase transaction, the rental market has much less negotiation than I am accustomed to experiencing. While the buildings on the Upper East Side genarlly offer a free month's rent and will pay brokers' fees, the buidlings downtown all vary with the incentives that the will offer. And while rents are down 15-20% from their highs, most landlords really are not negotiating. I think most rentals have reset their prices, and activity is holding steady, so there is not that much room for renters to strike a better deal. Obviously if the property has been on the market for quite some time, or if there are other apts in the building that are renting for less, than a renter has some leverage, but for the most part, there seems to be equilibrium in the New york City rental market.

My wife and I had a semi-tourist day yesterday in New york City. Actually, we had a bit of a tourist weekend. We had drinks at a rooftop hotel bar in Murray Hill before heading over to a friend's house for some excellent Indian food. After dinner, the party moved to the Underbar at the W in Union Square to have drinks, and then on Sunday we headed to the Lower East Side to have some of the best bagel and lox in NYC at Russ and Daughters. (As I am recapping all of this, I realize how great summer weekends in New York can be, when the City is practically empty. No issues with finding parking, no worries about reservations or lines for bars..). After brunch on Sunday, we decided to head to Chelsea to check out the new High Line Park.

For those that are not familiar with the High Line, it was at a one time an elevated railroad that ran above the west side of New York. It had been abandoned for many years until an effort was made to convert into a park in the sky, literally many stories above street level. Currently one able to stroll for about 20 minutes or so, but eventually there will be many more sections open to the public. There are trees, grass, benches and ice cream and lemonade stands. The tracks run under many buildings (the buildings were built over the tracks), and one such building is a new hotel, called the Standard. Apparently as this NYPost article writes, many guests at the hotel are having sex in front of open windows and the entire park and neighborhood is able to watch. For those that know the history of the Meat Packing District where the hotel is located, this should come as no big shock. So while my wife and I enjoyed a stroll enjoying one of NYC's cooler new attarctions (as well as each others' company), next time we will know that if we want to see some real action, we'll need to look up as we pass by the hotel!

Mortgage market gets messier

Adjustables, jumbos on rise in volatile NYC market July 31, 2009 05:39PM By Catherine Curan

Ask half-a-dozen mortgage and real estate brokers which bank has the best rates for residential mortgages in New York City right now, and expect two dozen different answers.

Then check back again, in a week or even a day, for an entirely new set of replies.

Buyers have typically benefited from shopping around for mortgage rates from various lenders. However, in the wake of a massive government bailout of ailing banks plus a recessionary deep freeze in the credit markets, the residential mortgage market is more splintered than it has been in 15 years. What's more, it's only growing more fractured.

"It used to be three or four banks would control 80 percent of the market, but now it's 12 banks, and those constantly change," said Eric Appelbaum, president of Apple Mortgage Corp. in Manhattan. "Rates are between 4 7/8 and 5 3/8 right this second, and two months ago they were cheaper."

Look beyond the waves of volatility, and a few clear trends emerge.

Wells Fargo and Bank of America are continuing their march into New York, offering highly competitive terms on 30-year fixed-rate "conforming" loans that meet Fannie Mae and Freddie Mac guidelines — at press time, as low as 4 7/8 for mortgagees with good credit and good income.

Former President Bush's Economic Stimulus Act raised the amount of loans guaranteed by Fannie and Freddie to $729,750 in high-cost areas, but for loans above that amount — also known as "non-conforming" or "jumbo" loans — smaller players such as Astoria Federal Savings remain the go-to source for highly competitive rates, despite the billions of dollars in bailout money bestowed on big banks to get them lending again.

In addition, since interest rates began rising in April, five- and seven-year adjustable-rate mortgages, or ARMs, are regaining popularity — despite the dangers of unaffordably higher payments that can tip weak borrowers into foreclosure when the ARMs reset.

In fact, the market has not yet ridden out the effects of the option ARM boom from 2004 to 2008, when over $750 billion of option ARMs were originated in the U.S. Indeed, Bloomberg News recently reported on a huge spike to 42 percent of such loans originated in 2006 becoming 60-plus days late. In 2007, 35 percent of the loans were late.

Despite the risks, some borrowers are still willing to take out these loans to avoid the higher initial rates of fixed mortgages.

"When the 30-year fixed was at 4.5 percent, people didn't really want to talk about ARMs," said Rose Schwartz, senior loan officer at Everest Equity Company. "As soon as the fixed rates hit 5 or 5.25 percent and we can talk about 4.5 or 3 percent for an ARM, it becomes more popular."

Trends in New York City are unfolding in the context of what has essentially been a government takeover of mortgage lending nationwide for loans under $417,000, the single-family home conforming loan limit applicable to most of the country. That has helped ease the lending freeze in markets outside New York, but the city's costly real estate — even post-bubble, the average Manhattan apartment still fetches over $1 million — relies more heavily on jumbo loans.

The action for jumbos has been in ARMs, with specialties emerging among portfolio lenders —institutions that originate and fund loans for their portfolios rather than resale to the secondary market and are not bound by Freddie Mac and Fannie Mae guidelines — who offer these loans.

For example, Maspeth Federal Savings & Loan is known for offering more attractive fixed rates, while Flushing Savings Bank is known for good deals on ARMs. According to several brokers, Astoria Federal Savings has some of the best deals for ARMs, and the most stringent requirements for credit and income. The bank has been offering both the best rates — as low as 4.5 percent — and fastest turn-times — as little as a week for approval — on ARMs, said Julie Teitel, senior vice president of GuardHill Financial Corp., a Manhattan-based mortgage banker and brokerage company, which works with the lender. "Brokers are finding little niches with specific lenders," said Schwartz. "Not every loan that will fit Flushing will fit Maspeth."

As jumbos go, so goes the New York mortgage market, said brokers.

In general, rates on 30-year fixed jumbos have been so high that mortgagees have opted for ARMs instead.

"ARMs have been the only game in town for jumbos," said Richard Bouchner, managing director at Commodore Property Group. "Thirty-year fixed jumbo rates have stayed ridiculously high, with banks pricing them to the point where they are basically saying, ‘If you are stupid enough to take out a loan at 8.5 percent, you've got to be pretty desperate.'"

The big banks, such as JPMorgan Chase, have offered these jumbos through their own lenders at up to 8 percent, a low percentage by historical standards, but high compared to the rates banks provide customers for deposits. With banks paying out 1.5 percent but charging 7.5 percent, the profit before expenses is 6 percent — an unprecedented spread, noted Guy Cecala, publisher of Inside Mortgage Finance Publications.

"It's very hard to explain that to a savvy New York customer who understands the correlation between an ARM and LIBOR [London Interbank Offered Rate] or the 10-year Treasury bill rate and mortgage rates," said Bouchner. "They say, ‘The banks are getting all this TARP money and are happy to take my deposits and give me a low yield, but now, when I need them, they are increasing their spreads?'"

This summer Chase is launching a pilot program to do jumbos with correspondent lenders for borrowers who have a Chase checking account or agree to open one, and Citi has jumped back in as well. Given the importance of jumbo loans, these moves could have far-reaching impact on both the rates and availability of these loans.

The decisions will hardly offset the plunge in new residential mortgages — which may be as steep as 50 percent this year — but signal a tiny step toward a more consumer-friendly marketplace.

"In the last month or two, most of the major banks decided they wanted to be competitive in jumbos," said Cecala. "Certainly they are not doing anything near what they did several years ago … but anything they are doing now is a huge move."