Thursday, June 14, 2012

MORTGAGES AND BLACKLISTING

In 2008, the Wall Street Journal reported:

"In the nation’s worst-hit real-estate markets, home sellers are suffering a new blow: They are being blacklisted by lenders. As property values decline and credit markets contract, home lenders nationwide are growing ever more unwilling to finance home purchases in sharply declining housing markets, driving prices down further. In some cases, lenders have ruled out entire geographic regions and property types altogether, most notably high-rise condominiums in South Florida and Las Vegas."

Recently, I am hearing reports of "blacklisting" in New York with respect to vacation and/or second home properties. It can be argued that such a practice is similar to "redlining":

"Other forms of redlining include the nullification of mortgage loans based on internal bank policies and procedures that fail to recognize complex property types. Co-Op and Condo Conversions in New York City are one such example. These building types are often made up of legacy rent controlled and rent stabilized units or may contain another protected class of tenant. Lenders who practice redlining often cite sponsor concentration or high rental concentration as an excuse to redline the property type. Such internal policies run counter to state and municipal laws and statutes, and are an illegal form of silent judgment on the economic and racial makeup of a building."

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