Freedman says private bank can't compete with HUD loan
By Michael Horowitz
BRONX, NEW YORK, June 14- Herbert Freedman said, this week, that representatives for New York Community Bank (NYCB) have advised him that the bank won't be able to compete with the offer of a HUD-backed loan that is currently seen as being in the offing.
Members of the Riverbay board met, Tuesday night, with officials of Wells Fargo Bank and the city and state as negotiations leading toward $600 million in mortgage refinancing for Co-op City seemed to be moving toward a final conclusion.
“The bank has advised us that they can't compete with the HUD-backed offer that we have been discussing in recent weeks,” Freedman said, in an e-mail this week.
Freedman noted that officials of the bank have asked him if the HUD-backed mortgage falls through.
Under the projected refinancing that seems to be on the table at this time, HUD would guarantee $530 million of the mortgage, while city and state agencies would guarantee $70 million of the loan.
The mortgage refinancing, Freedman has stated in recent weeks, would be for 35 years at a projected, fixed interest rate of 3.5 percent per year.
Co-op City has yet to submit a formal application for the HUD-backed mortgage because the Riverbay Corporation must shell out $5 million in fees before being considered for the loan through the federal agency.
Co-op City, if the time comes to submit a formal application for the HUD-backed mortgage, will have to dip into its reserve funds to pay these fees.
However, Freedman has said that Co-op City will get the lion's share of these fees back if Riverbay get the $600-million mortgage.
As a result, Co-op City's top management officials has stressed that Riverbay h as to be extremely cautious about paying the fees that are required in conjunction with the application for the HUD-backed mortgage.
Freedman has noted that Riverbay won't shell out the money for the fees until management feels assured that the community will get the refinancing.
Co-op City, in pursuing refinancing at this time, is trying to capitalize on historically low interest rates, hoping to lock in the low rates over an extended period of time.
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