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Adam Leitman Bailey, P.C. Helps Co-op Secure Long-term Capital Projects by Refinancing Underlying Mortgage

By Andrew C. Jorges


luxury

Every eight to ten years, most cooperative housing corporations in New York City refinance their underlying mortgages. That is because many co-ops, rather than taking 15/30 year self-amortizing mortgages which are paid in full at the expiration of the loan term, take out 10-year loans that are often interest-only or “balloon” mortgages where the entire amount borrowed is due and payable at the expiration of the 10-year term. The “balloon” payment must fully paid at the end of the loan term, which is why co-ops frequently find themselves contemplating a mortgage refinance.

Adam Leitman Bailey, P.C. recently represented a luxury co-op on the Upper East Side of Manhattan in connection with the refinancing of their underlying mortgage. The co-op refinanced the prior underlying mortgage of $3,000,000 with an interest-only mortgage in the amount $4,000,000 at an astonishing interest rate of only 3.666%. The co-op realized net proceeds of more than $835,000 as a result of the refinance which will be used to fund long-term capital projects that have been on the co-op’s “wish-list” for many years.

Attorneys at Adam Leitman Bailey, P.C. successfully overcame numerous obstacles, including a quick closing deadline, to ensure the co-op captured a low interest rate and closed prior to the enactment of an impending new tax bill being negotiated by Congress.

Additionally, Adam Leitman Bailey, P.C. was able to reduce the co-op’s refinance costs by approximately $84,000 by taking advantage of a loan consolidation, modification, and extension which required the co-op to only pay mortgage recording tax on the difference between the old mortgage and new mortgage, or $1,000,00, rather than on the entire new mortgage of $4,000,000.

Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS