Cohousing-L Mailing List: RE: limited equity/market value

[Rob Sandelin (robsan]

We were advised by our attorney and also by the realtor and title 
company who reviewed our condominium declarations that if we placed 
limitations on equity on resale of units it would disqualify us from 
FMNA approval.

FMNA approval is important if you are seeking commercial bank 
mortgages, and in our case that was key to us continuing our 
development.  The way the mortgage stuff works is that banks sell 
batches of loans to FMNA to free up capital to loan again.  Unique 
loans which can't be bundled, or are not sellable to FMNA must be held 
by the bank.  Since the S&L problems there are a bunch of new 
regulations which limit the amount of individual loans banks can carry.

I understand there are some special loan programs for "low-income" 
housing which allow banks to accept equity limitations. My advise, if 
you are looking for commercial bank mortgages, to ask your bank about 
what they will or will not accept in the way of limited equity.
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From: Judy  <netmail!BAXTER%55317 [at] VX.CIS.UMN.EDU>
To: Rob Sandelin
Subject: limited equity/market value
Date: Tuesday, December 28, 1993 10:45AM

Tucson write:
<Tucson Cohousing is having a discussion concerning Limited Equity or market
value in the resale of property or improvements.
1. Can anyone out there give some thoughts or feeling regarding this topic.
2. Did anyone compromise and what did you do.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The issue seems to be, to me, trying to keep CoHousing relatively affordable
for newcomers, vs limiting options for the people who leave, for whatever
reason.  Our group is very much mixed income, ranging from quite low (I don't
remember the numbers) to modest/moderate  (I don't think we have households
with much more than $50,000 per year, maybe $60,000 or $70,000 now that one
member, formerly unemployed,got a job?).  The concern was that if someone
needed to move elsewhere to a more expensive housing market, that family would
be penalized.  We were also advised that the housing market did not seem to be
appreciating, in fact quite the reverse, and that limited equity would probably
not make a big difference.  Anyway, no one was absolutely committed to the need
to be limited equity, and so we aren't.  We did write into the by-laws a
procedure which, quite frankly, I  think was fairly fuzzy, whereby the coop
proposes a "fair" price to the seller, along with, hopefully, a buyer from the
waiting list, and the seller is not required to take that price. our by-laws
committee is at work on lots of things, - i don't know hwere that stands.

JUdy

Judy Baxter, Monterey Cohousing Community, Twin Cities Area, Mpls/St.Paul MN
        (Mococo)                baxter [at] epivax.epi.umn.edu
Twin Cities CoHousing Network Voice Mail  612-930-7580
 Voice Mail for Monterey Cohousing - 612-930-7554