Investor underwrites new co-op loan despite lack of full insurance coverage

By Sam Richards

Staff writer

 

Tuesday, December 10 (11:00 a.m.): There has been a lot of hand-wringing in Rossmoor in recent months over how the inability of GRF to fully insure its $2.7 billion of residential and community buildings (and other assets) has helped lead to fewer home sales here. With Fannie Mae and Freddie Mac not willing to guarantee “non-qualified” mortgage loans, sales in Rossmoor have mostly been all-cash.

Fewer sales means less Membership Transfer Fee money to pay for capital projects in Rossmoor.

But the clouds may be parting, as some money lenders have found investors who aren’t put off by the fact Rossmoor can’t get enough insurance to cover every last dollar.

Mike and Tanya Sagalovich recently closed a purchase on a Ptarmigan Drive co-op, thanks to a New York-based investor willing to finance a non-qualified 30-year mortgage.

Anastasia Minkstein, a Benicia-based realtor with Re/Max, said she helped that couple — her aunt and uncle – find the financing for the Rossmoor co-op unit. The Sagaloviches were looking to move to Rossmoor from their San Ramon home of 35 years.

“When (Anastasia) brought us here to Rossmoor, we saw the pickleball court, and I told my husband, ‘We don’t need to look anywhere else,’” Tanya Sagalovich said. But the couple wasn’t ready to pay all-cash; that, she said, would have drained their 401-K account.

That’s when Minkstein called longtime associate Kenyon Cantino, a sales manager for Loan Depot in southern California. In an interview, Cantino told the News that a New York-based investor he has worked with wanted to get into the California co-op loan financing market.

And when Minkstein contacted Cantino about finding financing for her aunt and uncle to buy the Rossmoor co-op, the “stars aligned,” as both Minkstein and Cantino phrased it.

Mary Beall-Neighbor, a realtor with Re/Max’s office near Rossmoor, said such co-op loans have been approved by the Second Mutual board of directors, and she hopes similar approval is soon granted in First and Eighth Mutuals.

Beall-Neighbor said the reason this New York-based investor is willing to do non-qualified mortgages for Rossmoor properties may be that, “This lender knows a good thing because he knows how qualified buyers into Rossmoor are.”

But anyone seeking a co-op loan would still have to meet standard income, down payment and credit criteria, Cantino stressed.

New York City has many co-op apartment buildings, and such mortgage funding is common there. But it is a “niche” market in most of the rest of the U.S., Cantino said.

Minkstein said co-op loans are more complicated, and require more paperwork, than standard condo loans — in part because there isn’t a deed involved and take more time to close. Whereas a Rossmoor condo loan typically takes 20 to 30 days to close, her aunt and uncle’s took almost two months, she said.

Cantino said he doesn’t know any other New York investors looking to make co-op loans in Rossmoor. But the investor who backed the Sagaloviches’ loan is willing to do more and isn’t fazed by Rossmoor being able to insure less than half of the full $2.7 billion estimated value of the community’s homes and facilities.

More home sales in Rossmoor would also mean more money in the GRF Trust Estate Fund, from which Rossmoor’s major capital projects are financed. The one-time Membership Transfer Fee, paid by owners buying a home in Rossmoor for the first time, is currently $13,000, which goes into the Trust Estate Fund. The future of some capital projects in Rossmoor could be decided based on how much Trust Estate Fund money is available.

David Schubb, a 50-year veteran realtor who lives and works in Rossmoor, said there may well be some “pent-up demand” among prospective Rossmoor buyers for whom new mortgage funding sources will be welcome. But even in a world of cash-only purchases, he said, a lack of available homes for sale in Rossmoor has been more of a factor than lack of mortgage loans.

“The negativity that I hear, and that I read, doesn’t match my personal experience,” Schubb said.

Are more non-qualified mortgages in Rossmoor’s future? Beall-Neighbor hopes so. They will not only help buyers buy, she said, but help sellers sell.

“We have three other mortgage brokers that are local that can get the loan from the same source, but do not have other (mortgages) yet,” she said, adding that she’s optimistic there will be other sources for co-op loans before too long.

Cantino said the New York investor is willing to consider making other co-op loans in Rossmoor.