Sarah is purchasing a cooperative apartment in Manhattan for $850,000. She has been pre-approved for financing. What type of loan will Sarah most likely need to obtain for this purchase?
Correct Answer
C) A share loan secured by the cooperative shares and proprietary lease
Since cooperative apartments in New York are personal property (shares in the corporation plus proprietary lease), buyers cannot obtain traditional real estate mortgages. Instead, they need share loans, which are secured by the cooperative shares and the proprietary lease rather than real property.
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Related Topics & Key Terms
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Related Concepts
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.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
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