We got our loan from a small bank in a small town. Our only problem now is we need about 35k more to finish, since our first builder turned out to be a scam and made a mess of our house and took off with lots of money. We're hoping the bank will give us the money to finish. We will be close to finished when the money runs out. The remaining money is to pay the builder and finish up the electrical and heat. I can't handle waiting. We have a claim against the first builder's insurance company for negligence, but I don't have much faith in the justice system anymore, so I don't even consider the possibility of getting any money back. We've had such bad luck in this whole process, I just keep assuming the bank is going to tell us we can't get the money and then I don't want to think about what we'll have to do. We've done a pretty good job of not using credit cards. We've used cash to pay for quite a few things. My broker is just dragging his feet on gettng this appraisal and it's killing me. I met with him in August to set up another appraisal so we wouldn't be in this position of wondering as we're getting to the end of the money, and we still don't have it. So frustrating!!! Thanks for letting me vent.

I don't know what NY law is in this situation and I agree with the others who suggested there might be more to the story. Who knows what she's telling her landlord since it doesn't appear she's being forthright with you. Have you read the notices from the rental agency to discover the facts? Maybe the rent isn't as low as she says it is. As Ellen mentioned - there is no such thing as low rent in Manhattan. Did she attend college there or has she just relocated there for this job? If she's ignoring the notices from the landlord she might be having a mental meltdown - perhaps she's lost her job and is afraid to admit it. Does she have family that she can turn to for help - perhaps both emotional and financial. NYC can be a tough place to live. My DD went to college in the city and absolutely loved it. Her senior year she found a 6 bedroom brownstone in Brooklyn, negotiated the rent and lease and then she and 5 girlfriends moved in and commuted back to campus until graduation. She stayed for 2 more years until the group split up for various reasons - grad school, marriage, Peace Crop, job changes, move back home etc. My niece who is the same age has been in Brooklyn for 2 years, has a fantastic job with great pay and benefits and can't wait to get out - she detests the city, the lifestyle, the lack of a car etc. But this is her first experience with NY. And it isn't for everyone.

Mary, the secondary market is what's behind the lack of liquidity in mortgage financing today. Due to delinquencies & poor quality ratings the secondary market has all but dried up making it more difficult for people to obtain mortgage financing. Definition: The secondary mortgage market allows banks to sell mortgages, giving them new funds to offer more mortgages to new borrowers. If banks had to keep these mortgages the full 15 or 30 years, they would soon use up all their funds, and potential homebuyers would have a more difficult time to find mortgage lenders. Many of the mortgages on the secondary market are bought by Fannie Mae or Freddie Mac. Other are packaged into mortgage-backed securities, and sold to investors. This market is called the 'secondary market'. It's 'secondary' because the purchaser of the mortgage is not the entity that originated the note/mortgage. Examples: Fannie Mae buys mortgages from banks, a process known as buying on the secondary mortgage market. Fannie & Freddie are crucial to mortgage financing. They are GSEs (Government Sponsored Entities) yet independant corporations traded on the NYSE. They are at the epicenter of yesterday's market convulsions. It is estimated that the two GSEs hold about $5T in mortgage assets. /tricia

The question is how does the land value get used as a downpayment. You've said that houses in the neighbourhood are selling for $275k, so we'll assume that's what your house will be worth, for the sake of explanation. With any mortgage, building or buying, the bank wants to know that they'll be able to sell the house (and land together, obviously) for at least as much as you owe on it, in the event you don't pay your mortgage. So to protect themselves, they may say that the max they'll loan you to build or buy the house is 80% of what it's worth. So $220k is the maximum amount they are willing to put into that house. And that includes the land. If you were buying one of the existing houses, your downpayment would be the $55k needed on top of the $220k to pay the $275k for the house. And the idea is that you've got an incentive to keep paying your mortgage in order to not lose that $55k. Let's say for the sake of the explanation, your land was worth $100k, and it cost $220k to build the house. The house may still only be worth $275k. It doesn't matter to future buyers that the land and build cost was $320k, if they can get another similar house for $275k, that's all they're going to pay. And that would be all the house is worth. And this happens because custom costs more. You pay a premium for getting "exactly" what you want. So, assuming you own the land outright, you need another $220k to build. So you borrow that from the bank. The land becomes your "downpayment" because it's what you'll lose if the bank has to foreclose. If you didn't already own the land outright, and needed a loan to cover that, you can get the loan for $100k, and then borrow another $120k to build the house, and then have to come up with $100k towards the building cost. So while in the first example, you feel like you're getting the shaft, having to borrow the whole amount even though you own a $100k piece of property, it is still saving you having to come up with the extra $100k for the build. Or, if you had $25k equity on the land, you could borrow $145k towards your $220k build, and then only have to come up with $75k in cash. Other than putting up the value of the land against the risk of default, for a small amount of land value against the cost of a build, you don't really get to use the land as a "downpayment".