Too Many Investors Translates into Denied Mortgages

Oct. 13, 2015 — In this week's Ask Real Estate column in The New York Times, Ronda Kaysen fields a question about mortgages: "Just before I went into contract on a condo, my bank denied my mortgage, citing 'investor concentration.'" Kaysen explains that while it's perfectly legal for someone to purchase several apartments in the same condominium, the problem lies with the banks. "In general," she says, "lenders will not give someone a mortgage in a building where one investor owns more than 10 percent of the apartments or where more than half the apartments are owned by various investors." We've talked about this problem before. For starters, too many investors tends to mean lots of rentals — and neither Fannie Mae nor Freddie Mac like that. There's also the very real concern that an investor who owns many apartments may default on his or her mortgage or stop paying the common charges. That's what happened at one Bronx co-op that found itself on the brink of extinction twice. Follow their story in the next few weeks.