Co-op City is putting the finishing touches on a mortgage refinancing that could save it a whopping $149 million over 14 years – and eventual maintenance cost savings to its residents.
The sprawling development is in preliminary planning that will allow it to refinance its $621,5 million mortgage.
Its current rate is 6%, but due to rise to 6.5% over the next 14 years.
Under pending terms of the new mortgagte, it would pay about 3% annually for 35 years to Wells Fargo, with Federal Housing Administration insurance.
The current loan is with New York Community Bank.
The refi is being made possible through the expansion of the U.S. Department of Housing and Urban Development’s Section 223(f) program, expanded to cover cooperatives. That should allow the development to realize the 3% interest rate on a new loan between now and 2047, said Herbert Freedman, managing agent for Co-op City’s Riverbay Corporation.
“If we close in the next week or two, we will have a rate under three percent for 35 years,” said Freedman, noting that the time is now to take advantage of historically low interest rates. “That is the reason we are doing it.”
The refinance may reduce carrying charges for Co-op City shareholders, said Freedman.
According to a “savings calendar” released by Freedman, the cumulative annual projected savings of Co-op City’s mortgage being refinanced at about 3% a year instead of about 6% a year would result in a savings through 2047 of $449,952,608.
Under the plan, the Riverbay Corp., which run Co-op City, will have a new loan insured by the Federal Housing Administration. The federal Department of Housing and Urban Development will administrator the loan, with Wells Fargo as the original lender, said Freedman.
Elected officials involved in the effort to lobby FHA and HUD to agree to help Riverbay lower its long-term payment include U.S. Senator Charles Schumer, Congressman Elliot Engel, Senator Ruth Hassell-Thompson, and Assemblyman Michael Benedetto.
“For decades, Co-op City has been a middle-class haven and this application to HUD for refinancing is critical to make sure we maintain its affordability and quality-of-life for generations to come,” said Schumer. “This crucial refinancing plan would secure Co-op City’s financial future and it remains a bastion of middle class affordability for families, young couples and seniors for many more years to come.”
Assemblyman Benedetto said that he had been encouraging Schumer’s involvement in the process, and that the senator is certainly helping it along.
Benedetto said he is optimistic about the Riverbay board will approve the plan.
“Assuming that the terms are not onerous, I am sure that the board will approve it,” said Benedetto. “Co-op City will be saved an awful a lot of money every year, and it bodes well for the long-term stability of Co-op City.”
Patrick Rocchio can be reach via e-mail at firstname.lastname@example.org or by phone at (718) 742-3393