Lisa is a first-time homebuyer in New York looking at both condominiums and cooperative apartments. Her lender explains the key difference in loan products available. What is the primary reason co-ops require different financing than condos?
Correct Answer
B) Co-op ownership involves personal property while condo ownership involves real property
The fundamental difference is that co-op ownership involves purchasing shares in a corporation (personal property) plus a proprietary lease, while condo ownership involves purchasing real property with a deed. This property type difference requires different loan products - share loans for co-ops and mortgages for condos.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
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