Cohousing-L Mailing List: Why are lenders afraid of Cohousing?

[Susana Michaelis (susana]

Hi everyone,

We are wanting to acquire information about cohousing-friendly mortgage 
lenders and appraisers. We are in Nanaimo, BC Canada, so maybe our rules 
are different, but Credit Union long-time members and even those with 
bank accounts are getting the run-around.

Are there any cohousing communities that have left the word cohousing 
off their name,website and literature in order to circumvent the many 
mis-conceptions when it comes to financing?
Perhaps we need to come up with a new term that appeals to the 
mainstream. In North America the perception of cohousing in may be less 
favourable than in Denmark.

Here is a synopsis of what one couple thinks might be hindering lenders 
from supporting cohousing. Does this ring true?

In the case of an ordinary condo, if the borrower defaults and the  
lender repossesses the property, they can simply turn it over to a  
real estate agent.  But Co-ops and Cohousing have "restrictions" (our  
idealistic "hoops" that we all jumped through to become members), so  
even if a realtor could take the listing, it takes longer to find the  
right buyer, and consequently longer to get the money back. (And  
probably both the lender and the realtor would have trouble imagining  
why anyone would want to buy a cohousing unit).
        Co-ops are more like condos in that they don't "screen" their
buyers;  
the Co-op (Rochdale) Principles are their only hurdle for membership.   
They don't have a unifying ideal like our earth preservation values,  
and so their buyers probably don't feel any affiliation that would  
prevent them from defaulting--and  we've heard that the banks have had  
trouble with a couple Co-ops, so it's likely that those co-ops had  
some defaulting borrowers.
	It would be interesting to know what the "default rate" is in  
cohousing!
        
	And, while those thoughts may shed some light on our problem, they  
don't do much toward a solution.  It looks like the Cohousing movement  
needs to have its own lending agency--and that's a pretty tall order  
when all the cohousings are struggling like we are, just to keep  
afloat.  Maybe we should write to George Soros....

What do you think?
Susana Michaelis
www.pacificgardens.ca