Cohousing-L Mailing List: Why coops are scary to some folks (like banks)

[Rob Sandelin (floriferous]

A coop has a "group mortgage" which means that the group is responsible for
keeping up the mortgage payments if a unit goes vacant and or the owner
flakes out. This means as a coop member you are liable for not only your own
part of the payment but potentially a fraction of any missing payment as
well. Often to cover this coops charge 2-3 months worth of mortgage payments
in advance as a buyin cost, which you get back when your unit sells. (Condos
typically do the same thing with monthly assessments which are usually much
lower). A small coop like a dozen units is to a bank, a much smaller risk. A
large coop, like a typical 30 unit plus cohousing group is a larger risk,
even though there are more people to carry the load. The bank ALWAYS assumes
the worse case, which I was told in the case of Coops, they assume a 20%
vacant rate. This is one reason they are often very reluctant to invest in
large developments. And forget the National Coop Bank, they have strung out
so many people on so many projects they ought to just admit that they will
not fund housing. I went to a cooperative housing seminar  in Seattle a
couple years ago and they were saying that the average size of a bank funded
coop was 8 units. They also said that coops are required on average, and I
can't remember if this was local or national, that coop developers put up
45% of the Acquisition and Development costs. This compares to 10-25% of
condo AD percentage. This is a fairly large sum of money for a 30 unit
development, assuming they would fund such a large coop.

Rob Sandelin
South Snohomish County at the headwaters of Ricci Creek
Sky Valley Environments  <http://www.nonprofitpages.com/nica/SVE.htm>
Field skills training for student naturalists
Floriferous [at] msn.com


-----Original Message-----
From: cohousing-l-admin [at] cohousing.org
[mailto:cohousing-l-admin [at] cohousing.org]On Behalf Of Fred H Olson
Sent: Tuesday, April 15, 2003 7:34 AM
To: Forbes Jan
Cc: 'cohousing-l [at] cohousing.org'
Subject: RE: [C-L]_Ownership not necessary / Goodenough Comm.



On Mon, 14 Apr 2003, Forbes Jan wrote:

> A high proportion of Danish Cohousing established since the legislation
came
> in in 1981, is on a 'co-operative' model, designed to keep the housing
> affordable.  However for the most part it appears to be available to
middle
> income earners or above, or to older pensioner homeowners who have the
> assets to buy in.

Thanks for posting on this.  I think of much Danish cohousing as being
more of a coop model but my knowledge is too sketchy to post anything
authoritative.   But then I think of Danish government as being more
'cooperative' (despite recent trends) than in the US which makes the
context quite different.

Fred

--
Fred H. Olson  Minneapolis,MN 55411   (near north Mpls)
fholson [at] cohousing.org 612-588-9532 (7am-10pm Cent time)
List manager of Cohousing-L & Nbhd-tc  Ham radio:WB0YQM
http://www.cohousing.org/fholson


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