NY Urban offers new applications for HUD financing.

A mortgage banker that has been in existence for over 57 years has taken a federal mortgage program that has also been around for ages and is utilizing it to provide a new and outstanding service for its clients, creating phenomenal growth for the company during a period that many consider to be one of the worst real estate recessions in history.

New York Urban Servicing Co., Inc. has operated as a mortgage banking company since its inception in 1936. They are currently the mortgage correspondents for John Hancock Mutual Life Insurance Company, Allstate Life Insurance Company, Equitable Life Insurance Company of Iowa and John Alden Life Insurance Company. They are also approved Seller/Servicers for the Freddie Mac Multi-family Residential Loan Program and are approved HUD Mortgagees.

The company's President, Frank J. Harvey, and Executive Vice President, John G. Lama have owned and managed the organization since 1979. At that time the servicing portfolio was only $400 million and annual originations approximated $50 million. They have expanded the company's operations and increased the servicing portfolio to an excess of $1.5 billion. Annual originations now regularly exceed $150 million. They have also formed NY Urban Properties, which is a company-held real estate portfolio that includes their 5 story headquarters building located at 119 East 38th Street in Manhattan.

The company's major emphasis this year is centered around its successful HUD insured mortgage program for multi-family and cooperative owners. Irwin Shapiro, president of Irwin Realty Co., Inc. and New York Urban's Director of FHA Mortgage Financing, has been responsible for Urban's expanded involvement in this field. He has taken what was perceived to be an arduous and complicated process and made it flow smoothly and simply to the benefit of Urban and its clients. HUD 223 (f) mortgage financing for multi-family properties and HUD 221-D4 mortgages for the construction or rehabilitation of multi-family properties have been around for ages. The prime reason very few developers and operators have taken advantage of this program is because they are under the impression that once a mortgage is in force, HUD gets involved with the day to day operation of the property. This, of course, is not true in any sense, as HUD does not limit profits, select tenants or control rental prices. HUD merely asks for a year end financial statement and a property inspection every 12 months by the mortgagee (NY Urban). These are the same requirements of just about every institutional lender today.

Property owners also feel that the processing time to arrange the financing is very slow, but this too is untrue, according to the company. Shapiro has been obtaining commitments on a regular basis from HUD between 90 and 120 days, which is no different than private institutions and faster than securitized mortgage financing, he says. During the past 12 months Urban has been successful in arranging over $54 million in 223 (f) commitments. They include a 294-unit luxury hi-rise in Manhattan, a 568-unit garden apartment complex in Ronkonkoma, a 128-unit garden apartment complex in Hampton Bays, a 144 unit co-op complex in West Babylon, a 372-unit garden apartment complex in Holbrook and a 160-unit garden apartment complex in Kokomo, Indiana. In addition, they are currently processing another $60 million in HUD insured mortgages and included in this group are health care facilities under the 223 (A7) program (the recasting of an existing HUD insured loan). Many of these are clients that have previous experience with HUD financing. However, a number of others are new to the process and have been pleasantly surprised.

Shapiro says that the reason for Urban's success in this very specific area of mortgage financing is clear. Their staff members are former HUD employees who are familiar with every phase of the process and all of HUD's procedures. Bert King, for example, considered to be an expert in HUD affairs, works directly with clients to assemble the necessary documents. He also coordinates and attends all subsequent meetings with HUD'S appraisers, engineers and management personnel. He stays right with the borrower throughout the process, submitting a very complete application package, which assures a smooth transaction from the application right down to the commitment.

The ball is then carried by New York Urban's asset distribution department, utilizing their vast source of surety companies and pension investors to fund this federally insured loan at the best possible interest rate. Once funded, the loan is then serviced in house, completing the cycle.

The mortgagor receives a 35 year self-amortizing loan (40 years on new construction) of up to 85 percent loan to value at a fixed rate of interest (currently at 7.5 percent, which includes .5 percent for mortgage insurance). The loan does not require personal guarantees, is assumable without fee and can be prepaid after 5 years with a declining penalty and prepaid after the 10th year at par. HUD also allows secondary financing under their guidelines. Borrowers are permitted to take cash out over existing mortgages with the loan underwritten at 70 percent loan to value. Properties owned free and clear are perfect candidates for the program and co-ops are underwritten at 90 percent loan to value.

Once clients realize the level of personalized service that NY Urban provides, they show their appreciation with repeat business and the opportunity to provide them with mortgage financing for other properties in their portfolio, such as shopping centers and retail strips, warehouse, industrial buildings and office buildings. These properties are financed through correspondent lenders.