$621M mortgage will keep Co-op City affordable

HUD Secretary Shaun Donovan today announced a $621 million deal to refinance a previous mortgage at Co-op City, a large cooperative housing community that is home to more than 57,000 residents in the Bronx, New York. HUD and Wells Fargo Bank N.A. closed on the loan that will preserve long-term affordable housing for these families and significantly lower annual interest payments for the building’s owner over the next 35 years.  The new mortgage is backed by the FHA’s General Insurance and Special Risk Insurance Fund. By guaranteeing the mortgage, FHA’s Section 223(f) Program allows this 35-year loan to be financed with GNMA Mortgage-Backed Securities. This eligibility for purchase in the secondary mortgage market improves the availability of loan funds and permits more favorable interest rates.  As a consequence, FHA and GNMA’s security is helping Riverbay Corporation, the owner of Co-Op City, to save an estimated $400 million in interest payments over the life of the mortgage.

Real Estate Weekly

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