Supposed Mortgage Problems
From: Sharon Villines (sharonsharonvillines.com)
Date: Mon, 4 Dec 2006 06:00:40 -0800 (PST)
I think we need to be very careful in projecting supposed mortgage problems. The things I've heard mentioned on this list and in my community as things that a bank would see as a deal-breaker on offering (or even foreclosing) a mortgage are consensus decisionmaking, required meals, self-management, changing the formula for condo fee collections, and work requirements.

I recently called my bank and asked what they cared about. Wells Fargo said "nothing except the insurance certificate." I had asked about Bylaws revisions. They initially had to call me back so they could pull my file. They said there was nothing in the Bylaws they even cared about -- ours specifically mention self-management, labor requirements, and back up charging for labor not provided, and consensus decisionmaking with a majority vote back up. I was talking to a manager who sounded incredulous that I was asking the question.

All the manager at Wells Fargo said they cared about is the certificate of insurance and if the association dropped the master policy, I should call back and they would find me an insurer who would offer that to me on an individual basis. So even that is not a deal breaker.

One community recently changed their bylaws and had to get approval from all the banks holding mortgages on their property. It was a clerical task of sending letters and recording the receipt of signed letters in return. NO BIG DEAL. Changing the Declaration, however, is probably impossible but is rarely necessary since the Bylaws can supersede the declaration in some ways. States vary in what ways.

If you are trying to negotiate some kind of group mortgages with a lender before you are built and begin discussing all sorts of things with them that they are unfamiliar with, you are likely to get a lot of concern on their part because they will also see themselves as advisors -- they don't want to see you go wrong and lose a lot of money. But advice is not fact. Don't get them involved in all sorts of discussions they have no business being involved in.

On the whole, you are developing real estate and banks know real estate is a good investment and they have ways of appraising real estate. And mortgages are given on the basis of the value of the property and your personal ability to make payments. These are formula driven.

Mortgage brokers and real estate agents are not banks. They all have their personal preferences and can state those preferences as facts. That doesn't make it so.

On the other hand if a member WANTS certain provisions to be excluded from the documents, the easiest way to do this is to begin scaring everyone about what is or is not legal or acceptable to lenders. Or even begin discussing all this in front of a bank representative as if you were all crazy.

Get the facts in as neutral a way as possible.

Sharon
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Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org

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