Articles

Most housing cooperatives, along with other corporations, now must come into compliance with the reporting requirements of the Corporate Transparency Act (CTA). Passed by Congress in 2021, and effective as of January 1, 2024, the CTA is intended to protect national security and identify those who would use shell companies and other organizations to hide or benefit from their ill-gotten gains.

A large number of cooperatives are contemplating refinancing their existing mortgages. Several reasons exist for this. First, interest rates are at an uncommonly low level which makes it rather advantageous to take out a loan. While the existing mortgages are typically low, the rates now are extremely attractive and may not last much longer. Thus, there is a window open now to get great interest rates. Second, many cooperatives have experienced HUD being more burdensome in its demands than in the past. They seek to either eliminate or reduce HUD oversight by eliminating the mortgage which HUD insured or subsidized. A third and most common reason is the need to amass a sufficient sum of money to undertake repairs, renovations and enhancements of the property. Many cooperatives would prefer to complete these tasks in the near future to properly maintain the property rather than make improvements over an extended number of years.

A large number of Cooperative Boards are presently exploring the option of refinancing their existing mortgage. Whether motivated by a desire to get rid of HUD, to take advantage of relatively low interest rates, a soft market for construction, a need to improve the property, or any combination of these considerations, the Board must do a lot of homework. We have listed some vital questions that should be answered by the prospective lenders before a selection is made.

With the unprecedented and sustained drop in interest rates, a growing number of cooperatives are examining the possibility of refinancing their original mortgages. Many of our clients have found mortgages which cost the same or less than the existing mortgage. This makes it a popular option, since it allows for an infusion of capital that not only retires the old debt but also funds capital improvements to upgrade the property.