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HDFC Coops | Facts vs Myths

45 Central Park North
There are about 1500 HDFC coops in NYC about half are in Manhattan. Most have come through various programs run by HPD (Housing Preservation Department) in order to privatize the City's in REM (foreclosed) stock.

Buildings in the Tenants Interim Lease Program have been gut rehabilitated by HPD then they will be converted to HDFC Cooperatives and sold to the tenants for $250 per apartment. The "buy-in" price for all current residents is now $2,500.

HDFC cooperatives originating from HPD Division of Alternative Management Programs (DAMP) have certain restrictions and depending on when the conversion took place they are slightly different.

The most common restriction is income: Conversions prior to 1995 require an income of new shareholders not to exceed 6 or 7 times the annual maintenance plus utilities. If the incoming household has less than 3 dependents you multiply the annual maintenance plus utilities times 6. If the family has 3 or more dependents then by 7.

There are a number of HDFC cooperatives converted from 1986 to 1995 that have a further restriction requiring the payment to the City of 40% of any profit on the resale of the shares. These are called 60/40 buildings.

HDFC co-ops are intended to be the primary, permanent homes for the self-supporting working low- to moderate-income households. They are not intended to be an investment property, for market speculation, or for non-occupant parents to purchase them for their adult children although some HDFC coops will allow gifting.

In most subsidized housing low income is considered below 100% of the NY area median income and moderate-income is above the median. Moderate incomes range from 120 percent to 165 percent of the area’s median income.

A project in the South Bronx, for example, might be restricted to people with incomes up to 80 percent of the median, which means $68,000 for a family of four. But in Harlem, Morningside Heights, Clinton/Hell's Kitchen or the East Village the limit might be as high as 165 percent of the NY median, or $141,735 because incomes are higher in those neighborhoods.

Generally,  all HDFCs usually require a "Transfer Fee" commonly called a "Flip Tax" often up to 30% of the seller's profit but this can vary. It is necessary to review the Proprietary Leases and Offering Plans to ascertain exactly what the restrictions are for any one particular HDFC cooperative as there are many variations.

HDFC coop boards are not that different from any other coop board. All coops including HDFC are set up as private housing corporations. The coop board is entitled to approve or deny any purchase for any reason other than discrimination. The only difference is that HDFC coops have maximum income restrictions. The must remain "affordable" based on New York metropolitan area statistical median income standards released annually through HUD and HPD as determined by each HDFC.

Cash is not always King: Cash only required may be a red flag. There are many reasons why a lender will not lend in an HDFC coop but there are lenders (CitiBank, Chase, First Republic) that will loan in HDFC coops that have good financials and are managed well. Many established HDFC coops are on the lender's approved list.

Some coops will need to be approved by a lender because they haven't had a recent sale. There is an approval process. If the coop cooperates with the lender and answers the lender's questionnaire and meets the lender's and Fannie Mae guidelines they will most likely be approved.

There are a lot of myths about HDFC coops, many are perpetuated by brokers that lack experience and knowledge of HDFC coops. They don't understand the spirit and intent of "affordable housing" despite taking a listing. There are a lot of brokers in Manhattan but few with successful experience selling HDFC coops.

There are many good HDFC coops. For qualified low- moderate-income buyers can offer an opportunity for affordable home ownership but like everything else in NYC, there are always some bad apples.

Caveat Emptor. Let the buyer beware. Buyers and or their (HDFC experienced) attorney should do their "due diligence" They should request financial reports as well as copies of the minutes of the Annual Shareholders Meeting, proof of insurance and Fidelity Bond, as well as payments of Property Taxes and Water & Sewer charges.


  1. I am buying in an HDFC coop, and I've received board approval and a commitment letter from the bank, however I cannot close until after the new year, and the coop attorney is now suggesting that I will have to be reevaluated for income guideline purposes. What can I do? Me and my partner qualified before under our combined tax returns, but our pay stubs will not qualify us for 2015, but our tax returns may except we will not have them available until April.

  2. You should close in 2015. There is still a week left. You need your attorney to schedule a closing ASAP.

  3. What about income restrictions for HDFC's that converted after 1995?


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