Battery Park City facing possible mortgage crisis

March 29, 2010 2:59:59 PM PDT
These are some tough times for people living in Battery Park City. They say Fannie Mae has stopped backing loans for the area, making it even harder for people to buy or sell apartments there. Condo and co-op sales have plummeted recently.

The dreary skies over Battery Park City Monday apparently weren't the only clouds hovering over the lower Manhattan neighborhood.

"We've been having issues probably since the beginning of 2009 in some buildings, and it can be quite challenging," said real estate broker Terry Lautin, of Prudential Douglas Elliman.

Lautin says she hasn't been able to sell an apartment in the area since December of 2008 because Fannie Mae has temporarily stopped buying individual mortgages for condos and co-ops.

One two bedroom-two bath with a view of New York Harbor has been on the market for more than a year and has a qualified buyer who can't get a mortgage.

"Any loan that will be sold to Fannie Mae is a loan that is not being made right now," Lautin said.

Sales in Battery Park City are down compared to the rest of Manhattan. According to the Web site, February sales in the area fell about 59 percent from the same period last year. But in Manhattan overall, they were up 61 percent.

Battery Park City is the only neighborhood in Manhattan where residents must pay rent for the land their buildings stand on. Some suspect those ground leases may be behind Fannie Mae's tightened lending requirements.

The Battery Park City Authority, which negotiates the terms, confirms Fannie Mae is currently reviewing it's ground lease agreement to make sure it meets nationwide standards.

The recent difficulty getting mortgages for apartments in Battery Park City has left some area owners worried about their own investments there, but Lautin says value hasn't yet been specifically affected.

But she admits that may change if the mortgage drought continues.