FEASIBILITY ANALYSIS: AFFORDABLE CO-OP SHAREHOLDER MORTGAGES

The New York City Department of Housing Preservation and Development (HPD) is the largest municipal housing agency in the nation. HPD promotes quality housing and thriving neighborhoods through the implementation of affordable housing preservation and development programs. The Housing Development Fund Corporation (HDFC) has developed approximately 1,050 shareholder-owned cooperatives in NYC containing a total of more than 25,000 units, making them a significant percentage of the City's affordable housing stock. HPD solicited a Capstone team to evaluate shareholder access to financing and determine the types of risks that lenders take to underwrite these loans. The team performed a detailed analysis of HPD's proposed HDFC co-op regulatory agreements, interviewed lenders on their underwriting terms for limited equity co-ops, and performed a comparison of the City's existing HDFC tax exemption with a newly proposed model. This analysis helped HPD assess the impacts of newly proposed regulatory agreements on the ability of future shareholders to obtain financing.