New York Housing Market May be Seriously Disrupted

I sent this note to my New York elected officials. I would ask that you do the same regarding Guidance on Private Transfer Fee Covenants,(No. 2010-N-11):

The proposed Federal Housing Finance Agency (FHFA) guidance that would prohibit Fannie Mae or Freddie Mac from buying mortgages on property that have a private transfer tax fee agreement, or a “Flip Tax” as it is known in New York, would seriously disrupt the stability and efficiency of the city’s housing market.

The New York City condo and co-op housing market has operated with a flip tax for some time.  In one study, it was reported that more than 50 percent of the co-ops in New York City have a flip tax. In many cases, the flip tax is paid by the seller and is a percentage of the seller’s profit.

This tax has bolstered the capital reserve fund of numerous buildings thereby funding critical and necessary capital improvements, including facade work which ensures public safety. These improvements have benefited the residents of these buildings and the surrounding neighborhood.

In New York these fees are going back to the property for the benefit of the building and its occupants, not to the building developer.  These fees typically fund building maintenance, the repair and replacement of building systems, and additional building wide improvements that benefit the residents. FHFA is principally concerned with the private transfer fee covenant when the project developer, or their designated third-party receives the proceeds, not when the fee goes to improve the operation of the building.

We urge you to drop this current proposal which would harm New York City’s housing market. In my opinion, condos and co-ops in New York City are sounder investments for Fannie Mae and Freddie Mac as a result of a building’s healthy reserve fund which in most cases has been funded through flip and transfer taxes.

Lee can be reached at (347)829-9996.
Apartments in Manhattan

Mortgage purchases up, refis down as tax credit expiration approaches: MBA

04/28/2010
The rate of mortgage applications for the week ending April 23 decreased 2.9 percent from the previous week on a seasonally-adjusted basis, according to the Mortgage Bankers Association’s weekly survey. But while the overall rate of mortgage applications declined, this was largely due to a drop in refinancings, not a decline in demand for new mortgage purchases, the report says. The MBA’s purchase index increased 7.4 percent, as the homebuyer tax credit expiration approached, while the refinance index dropped 8.8 percent. The average interest rate on 30-year mortgages stayed relatively flat, increasing to 5.08 percent from 5.04 percent week-over-week. TRD

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Doormen Union Strike Averted

I am pleased to report that the Realty Advisory Board (RAB) and Local 32BJ reached an agreement just past midnight last night. The agreement, ratified by the RAB and subject to ratification by the Union, appears to be a fair and reasonable settlement. Over the four year agreement, building service workers will receive an increase in wages averaging 2.16% per year.  The total package will average 2.92% per year. The agreement calls for protection to owners from unexpected future cost escalation for health benefits.  For the first time, Management has now transferred the risk of extraordinary regulatory or inflationary increases in benefits to the Union.  This was not part of the previous agreement. In addition to this important change, the agreement calls for a significant reduction in the health benefit cost starting in 2012. The projected reduction will cover a significant portion of the wage and benefit increase over the four year agreement.
 
I want to thank Howard Rothschild, President of the RAB, lead negotiators Charlie Dorego, Eric Rudin, Jeff Brodsky and our lead attorney Paul Salvatore for the time and effort required to achieve this fair and positive agreement for all parties.

Steven Spinola – President, REBNY