At the Fitzgerald, a new condominium development carved out of a prewar warehouse on West 117th Street in Harlem, sales have been steady but slow, with some would-be buyers worried about getting the jumbo mortgages they need.
So the developers, Robert Friedman and his brother, Bernard, have decided they will issue mortgages directly to buyers at competitive interest rates, on as much as 90 percent of the purchase price, with no points and no appraisal fees.
“We see buyers who otherwise in a different market would have qualified for mortgages,” Robert Friedman said. “It works for buyers, we break even on costs, and it facilitates a sale.”
Mr. Friedman has seen the ups and downs of the real estate market through several stormy cycles, and offered similar financing plans in the 1970s and ’80s. Now, as the velocity of sales has slowed, he is trying again, though he is holding the line on asking prices.
Since the loan offer was included in a condominium plan amendment in April, Mr. Friedman said, three buyers have signed contracts with the financing and a fourth is about to. Two of the buyers took out the maximum conventional government-insured mortgages for the first $417,000 and then used sponsor financing for the rest.
The Fitzgerald, just off Frederick Douglass Boulevard near the epicenter of Harlem’s condominium development scene, has 47 one- and two-bedroom apartments, available from $655,000 to $1.85 million (for a two-bedroom 2,284-square-foot penthouse with four skylights and a terrace). The apartments are being marketed by Halstead’s new development group.
So far, 19 units are said to have gone into contract since the building was approved for sale about a year ago. The hulking warehouse was last used as a charter school. Under the renovation, much of its facade has been covered with terra-cotta-colored panels, and a sculpture that looks like a wall of water was installed in the lobby. The condominium is due to open in the next week or so.
The loans offered by the sponsor have the same repayment schedule as 30-year-loans, but are available for a maximum of seven years — more than enough time, Mr. Friedman said, to wait out the national real estate malaise. Interest rates will be set a half a percentage point below those offered by Citicorp on comparable 30-year loans.
He said buyers would be required to put down at least 10 percent, or $65,000 for the least expensive unit, and to qualify for the loans. But he also said the sponsor’s standards would be “much more liberal” than the ones currently set by most banks.
Andrew Gerringer, who overseas new developments at Prudential Douglas Elliman and is not involved in the Fitzgerald, says that “when things are tough,” sponsor financing is “not a crazy idea,” if pricing is in line with the market.