Cohousing-L Mailing List: Re: financial snooping

[Mac Thomson (mac]

We moved in in 2000 so we went through all of this about 7 or 8 years  
ago so my memory may be a bit weak.  We got our construction loan  
based on our project being completely presold to qualified buyers.   
The bank that gave us our construction loan required proof of  
prequalification from all of us future buyers.  I think the bank did  
some of the prequalifications and they also accepted prequalification  
work from other lenders.  What this did was it took the  
responsibility off our shoulders for figuring out if our members were  
in fact qualified buyers.  I realize that as the developers, we could  
still have ended up with unsold homes if someone prequalified, but  
really wasn't qualified after all, but we chose to rely on the bank's  
work.

We also required cash payments from members as we approached  
construction, which I think helped keep things "real".  Something  
like $6000 when they became a member, 10% of eventual purchase 6  
months before construction, and maybe even 20% as we approached  
construction.

In the end, we had several households drop out because of life path  
issues (they just decided to do something else other than live at  
Heartwood), but none because of inability to afford to buy their  
home.  Those drop outs did cost us plenty in terms of design and  
marketing hassles ($$$) so we did end up withholding $2000 per  
dropped out household to cover those costs.  I wish it would have  
been more.

To answer you question, we never did get too financially nosey.  We  
let the banks do it.

Good luck!

Cheers,
Mac

--
Mac Thomson

Heartwood Cohousing
Southwest Colorado
http://www.heartwoodcohousing.com


"Gratitude is Heaven itself."
        - William Blake
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On May 1, 2006, at 4:16 AM, cohousing-l-request [at] cohousing.org wrote:

> Date: Sun, 30 Apr 2006 17:33:04 -0700 (PDT)
> From: Leah <drsweetie [at] yahoo.com>
> Subject: [C-L]_ financial snooping
> To: cohousing-L [at] cohousing.org
> Message-ID: <20060501003304.74608.qmail [at] web51011.mail.yahoo.com>
> Content-Type: text/plain; charset=iso-8859-1
>
> Hi! I am part of the finance committee at Fordyce street cohousing.  
> I am wondering how deep other groups delved into each other's  
> finances during development. When we started, we made a requirement  
> of a mortgage pre-authorization and a simple form asking where they  
> plan to get the down payment, etc. I soon learned that it takes  
> little more than a pulse to get a pre-auth. When it came closer to  
> taking out a construction loan we started to put together people's  
> financial forms, etc. There was one or 2 members where we thought  
> "gosh, their income seems really low to afford this house" and we  
> asked them for more info and they mapped out their plans for living  
> on ramen noodles for the rest of their lives, etc. Actually their  
> plans seemed kind of reasonable and we figured they were adults  
> that could make their own decisions about finances. We are less  
> than a month from breaking ground, and recently, one of the "close  
> to the financial edge" families thought about dropping out due
>  to affordability issues. Their dropping out would have put us in  
> significant financial distress and probably delayed our loan and  
> our project. They decided in the end that they couldn't do that to  
> the group and stayed in, but now other members are saying that we  
> should have looked closer at their finances.
>   How far did others go, and does anyone have ideas about drawing  
> the line between nosiness and assurances that people can make it?
>
>