Cohousing-L Mailing List: RE: Membership control in resales = co-op ownership

[Rob Sandelin (Exchange) (Robsan]

One thing I would add to David Mandells post, is the reason banks, at least 
in our area, do not fund coops, is there is nothing really substanative to 
foreclose on.  In a coop, the organization owns the unit, not the 
individual, the individual owns shares in the organization, and thus the 
banks are not really interested in Shares as collatoral on loans as opposed 
to real titles to real units.  There are now some new regulations that 
virtually forbid FNMA to buy coop loans and thus any coop loan is held by 
the bank, and can't be resold.  The federal regulators have severely limited 
the amount of bank held loans as one of the "reforms" in the banking 
industry after the SL debacle. I was told by a bank V.P loan officer that 
coops are not lendable anymore, at least not in the competitive market.

Winslow, which is a coop, was able to convince the senior V.P. of a local 
credit union to fund their project with a bank held loan.  The senior V.P. 
later got canned, and there was some confusion for awhile about their loan 
although they eventually got it straightened out. So to buy a unit at 
Winslow their is one bank which you can get a mortgage from.  This has made 
a couple of small problems for reselling units, although the interest rates 
paid are not too far out of line with competitive loan rates.

There is another group in our area called Songaia, which is developing 12 
units as a coop, but have not figured out a funding mechanism yet. 
 Commercial banks won't touch them, so they are working out some kind of 
internal funding mechanism where a couple folks pay cash up front for 
building their units, then using those units somehow as proof and 
collatoral.  They are trying to pull this together now and as I get the 
details of their success or failure I'll add it to the list.

One way to control membership is to control sales of units by keeping an 
active mailing list, producing a newsletter, doing outreach, creating a 
waiting list process which includes some sort of membership ritual, such as 
waiting list members have to attend 4 functions a year.  People are not in 
any way legally bound by this, but why wouldn't they sell to someone on the 
list?  So even if you have no units for sale, put out some energy to promote 
yourself just the same. That way, when life strikes and people move out, you 
have a waiting group of folks in the wings ready to buy a unit.  So far this 
is how all the built homes  sold so far (2) have gone at Sharingwood.

Rob Sandelin
Sharingwood