A cooperative in Manhattan is converting to a condominium. How does this conversion affect existing shareholders with share loans?
Correct Answer
D) Lenders typically require loan modifications or refinancing to reflect the change in collateral type
Conversion from co-op to condo changes the collateral from personal property (shares) to real property (condo unit). This fundamental change in security typically requires lenders to modify existing loans or require refinancing to properly secure the debt with the new real property.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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