February 27, 2009, 11:07 am

Few Borrowing Options for Some Condo Buyers

By Jay Romano

I am in contract to buy a condo in a recently converted prewar building. It’s a noneviction conversion, so about two-thirds of the building remains rental, and one-third has been converted to condos. All of the condo units have sold.

I’m running into trouble securing financing, because of the low owner-occupancy rate. I find this confusing, because all of the condos have already sold, and the remaining units are occupied and producing rental revenue. I would like to close the deal, but am stuck if no banks are willing to finance a purchase in such a building. What can I do?

“I have gone over this in detail here with our underwriters,” said Michael Moskowitz, the president of Equity Now, a mortgage lender in Manhattan. “And unfortunately, there is no one we deal with or even can think of who would lend on a noneviction condominium that is less than 70 percent owner-occupied.”

While most banks have tightened lending standards, Mr. Moskowitz noted that some of the smaller banks might be willing to lend money to those with whom they have had a business relationship, “but that is only speculation on my part.”