Question on proprietary lease for prospective property

[Andrew Hongo]

First-time apartment buyer in Brooklyn here. I don't know much about proprietary leases but apparently it's an issue for a co-op I'm thinking about making an offer on.

I'm getting a mortgage through my bank, and when I approached them to check the financials on this particular apartment, they said the project was declined because it has a proprietary lease that expires in less than 30 years. My bank explained Fannie Mae will not approve because the owner of the land can re-claim the land before the term of mortgage is completed.

One person told me that I could easily find another bank that is not concerned about proprietary leases. Another person told me this could be a problem in the future should I try to re-sell the apartment, because prospective buyers might run into the same issues I am right now.

So I'm wondering: should a red flag go up when I run into a building that has a proprietary lease expiring in less than 30 years? Or is it not that big a deal?