Home improvement construction loan

Mayor Michael R. Bloomberg, New York City Housing Development Corporation (HDC) President Emily Youssouf and Banc of America Securities' Phil Smith announced a low cost, innovative venture to increase the construction of affordable cooperative developments as a result of a Bank of America revolving loan fund of $100 million and loan financing provided by HDC.

This collaborative lending program, which will increase affordable homeownership in the City, is expected to create 3,000 apartments over the next five years and allow HDC reserves to finance a greater number of homeownership units. Mayor Bloomberg, also joined by Department of Housing Preservation and Development () Commissioner Shaun Donovan and President and CEO for Harlem Congregations for Community Improvement Incorporated Lucille McEwen, announced the construction of affordable cooperative developments at a press conference at Madison Plaza, an HDC financed cooperative, located at 1825 Madison Ave., between East 118th and East 119th streets.

"Owning a home is the American Dream and homeownership is vital to neighborhood stability," said Mayor Bloomberg. "Now, with this partnership more working New Yorkers will be able to realize their dream. Our New Housing Marketplace plan challenged the private sector to invest in affordable housing. And Bank of America's commitment demonstrates the private sector's willingness to invest and leverage the City's own investment in affordable housing. This is another example of how we will reach our goal of creating and preserving 65,000 apartments."

Most of the funds in this program will finance developments that have not yet begun construction. This financing program will keep the sale price and monthly maintenance costs of co-ops affordable to middle-income New Yorkers in two ways. HDC and Bank of America will provide low-interest loans to finance co-op apartment developments. The long-term nature of the HDC loans will allow the developer to pay off other costs and make a profit while keeping the sale price of apartments affordable. Once the apartments are built and sold, HDC will finance the underlying mortgage from a combination of bond proceeds previously sold to B of A at a fixed interest rate and HDC's 1% interest. This will significantly reduce transaction costs, and in turn help keep the sale price and monthly maintenance charges.