Big mortgage buyer gives green light to purchasing loans secured by condos in the lower Manhattan neighborhood after an extensive review of the terms of the buildings’ ground leases.
By Amanda Fung
Battery Park City residents hoping to sell their apartments can breathe a little easier. Fannie Mae said it will back loans in the Manhattan waterfront neighborhood now that it has completed its review of the neighborhood’s ground leases.
Residents in the neighborhood have to pay rent for the land their buildings stand on. Each of the dozen or so buildings in the area has its own ground lease. Those ground lease fees, which are factored into residents’ monthly payments, could more than double as the leases expire in 2011. That potentially steep rise would have to be taken into account in the underwriting of loans in the neighborhood. Two months ago, Fannie Mae said it was reviewing these ground leases.
“Fannie Mae is sending a letter to the lenders who have originated—or have expressed to us an intent to originate—mortgages secured by condominiums in Battery Park City, informing them that the ground leases on the established condominium projects have been reviewed and are acceptable,” the government-backed entity said in a statement. “We will continue to accept deliveries of eligible loans secured by condominium units in Battery Park City.”
Just last month, two new luxury condominiums in the neighborhood developed by Milstein Properties—Liberty Luxe and Liberty Green—were granted preliminary approval by Fannie Mae. That meant Fannie Mae would purchase mortgages granted to buyers in the buildings. The conditional approval makes it easier for buyers to purchase condos in the two new sprawling developments. In total the two complexes will have 471 units.
“I think Fannie Mae made the right decision,” said Cynthia Crowley, director of relocation at boutique residential brokerage Olshan Realty. “I’m glad they are looking at the value of the area as a whole.”
Last month, Fannie Mae said it has more than $100 million in loans secured by condominiums in Battery Park City in its mortgage-backed securities and portfolio. Since September, Fannie Mae has purchased more than 30 loans for condo units in the area.