May
27

Government Guarantee of Large Mortgages Ends September 30th

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The Federal Government backed new mortgages as large as $729,750 for the last three years in high cost states such as New York and others.  As of September 30, this will no longer be the case. 

 According to this New York Times article and the National Association of Realtors, there is likely to be downward pressure on prices in a lot of markets.  The National Association of Realtors plans to lobby heavily to get an extension on the loan guarantees.

It is my belief, however, in the Manhattan market, where over 70% of apartments for sale are Coops, this may be a tempest in a teapot.  Most coops require anywhere from 20% to 50% down payments, and most coop boards insists on high income to debt ratios, as much as 25% to 30% maximum debt to income.  Likewise, to get financing on a Condo, lenders have been asking for 20% or more as a down payment.

 While other areas in the country may feel the pinch, Manhattan is likely to be unaffected by this change in Government guaranteed mortgages.

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