The Six Steps - Part 1

On May 16th, I posted some underlying mortgage advice under the title "First Things First!" and suggested that readers stay tuned for more. Well, here we go!

While today's interest rates are not the absolute lowest that they've ever been, they are pretty close to the bottom. So, that makes this a great time to refinance an underlying mortgage, right? Were the market still not suffering from a severe subprime hangover, I might say "yes." However, the continuing anxiety over bank balance sheets, lax underwriting standards, and declining real estate values has every lender rethinking their criteria.

Even if your co-op is fully sold, well-located, and in very good condition, it may not grab the full attention of a loan officer. In today's environment, how your co-op presents itself may play a bigger role in what kind of loan you get than it would in more normal conditions. To assure that you get the best loan available, you should follow what I call "The Six Steps to Success."

The first step is to become an expert about your co-op and your building. I continually am amazed by board members who call to get information about a new underlying mortgage but can't answer the most fundamental questions about their building. So, before making any calls, assemble a file with the following:

• A basic fact sheet, containing the co-op’s address, block and lot numbers, lot dimensions, number of units, number of floors, number and type of elevators, type of heating system and fuel, and other relevant information.

• The offering plan.

• All amendments to the offering plan.

• An up-to-date maintenance roll showing each apartment and its current monthly maintenance charge.

• A list of sponsor, investor, and sublet apartments showing the rents collected from each.

• The most recent three years’ financial statements.

• A list of all apartment resales during the last three years.

• Information about your current loan (lender, monthly payment, interest rate, due date, prepayment provisions).

• The year when your building was converted and the percentage of shares owned by the sponsor, if any.

• Any other important information about your cooperative.

That's it for Step 1. Stay tuned for Steps 2-6.