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What have coop's been using as a minimum down payment percentage? 10-15-20?
I need to restate my last post. Our co-op has recently seen some 10% down mortgages with PMI. The problem with raising the bar to 20% is that you decrease the pool of buyers. Remember, if the buyer goes under, the co-op still has primary lien and can recoup the missing maintenance and legal fees. Assuming the co-op has a policy of sending late payers into the legal process fairly soon after the late event occurs (60-90 days, for example), your considerations should only be timing of when the maintenance is received and not whether the maintenance is received. Your reserves should cover the timing too.
we changed from 10 to 15% a couple years ago, maybe 8 years or more.
It was abot 6 months before the housing mess started coming out. They wanted to go to 20% we went to 15%, however i beleibe tey became more stringent on buyers money in the bank and their finances in reserve if they lost their job, ie 1 year of maintenance in reserve.
i didn't realize how messed up the mortgages were, when i got my mortgage in 1983, it was pretty strict as far as income and amount borrowed . with the way they were throwing mortgages around i could have bought a i million dollar property for the same money. it was insane.
i see the other post below states PMI, i thought PMI was necessary if you put down under 20%, it was when i bought. i could not believe that it wasn't required anymore under 20%. idiots
I push for a 20% rule in my buildings because if (God forbid) we were to have a stronger housing slump, and property values drop by 10 and 15%, the coop would have no leverage against someone who is financed at 90% and possibly now upside down on thier loan... they may even walk away from the liability if they get in trouble.
~AR
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WHile our Co-op only requires 10%, I believe the new mortgage rules are closer to 20%
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