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

[Chris ScottHanson (chris]

I summarize it this way.

Banks want to loan to those that do not need their money.  They want  
to loan to those you will make use of their money.

So - the challenge is, look like you don't need it.  Which means look  
strong financially.  This is why you may have to seduce them with  
evidence of your financial capacity.  This may take the form of  
personal financial statements, even though you do not want to  
personally guarantee the loan yourself.

So, dance with the bank.  Look strong.  Invite them to consider you.   
Then leverage your strong pre-sales in this down housing market to  
your advantage.

Chris

On Apr 20, 2009, at 7:53 PM, Denise Meier wrote:

> well put, sharon!
> On Apr 20, 2009, at 4:56 PM, Sharon Villines wrote:
>
> > On Apr 20, 2009, at 6:40 PM, Susana Michaelis wrote:
> >
> > > 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.
> >
> > Bankers are totally risk-averse. They are lending someone else's  
> > money
> > and they are evaluated on whether that money is repaid. If your
> > project goes under they have lost millions of dollars of that someone
> > else's money. If they do that very often, they are not only out of a
> > job but quite probably will "never work in this town again." What
> > other bank will hire them?
> >
> > Plus it makes them feel like they have been taken advantage of -- by
> > you. This is why bankers only want to loan money to sure things, as  
> > in
> > "you can only get money if you have money."
> >
> > Don't confuse the picture. Your aim for borrowing money is to build a
> > residential community. As far as the bank is concerned it is financed
> > like any similar real estate project.
> >
> > Being a cohousing project only limits your ability to sell the units.
> > To them, it would be like building a multi-million dollar project and
> > restricting sales to people who like to eat vegetarian food in groups
> > at tables that are too small. It will limit sales and re-sales. The
> > banker knows this is a bad idea even if you already have all the  
> > units
> > sold. Foreclosure in their dreams.
> >
> > Go in with a standard story and all the papers to back it up. You
> > aren't lying because you aren't borrowing the money to finance the
> > cohousing part of your project. You are financing the real estate
> > part.
> >
> > Think about it for a minute -- no one goes in and says I want to
> > borrow half a million dollars to build a house with a hot tub so we
> > can invite our friends over, get drunk and high, and have group sex.
> > Even if they are totally sound financial risks, bankers can't put  
> > that
> > in the documents they present to the bank board (or whatever) that
> > approves the loan. But if they leave it out, they are quite probably
> > submitting false papers because that really really was the reason
> > given for borrowing the money.
> >
> > Lots of people want to borrow money and banks have their pick of the
> > lot. They go for the sure thing. Do whatever you can to sound like a
> > sure thing. No vegetarian food. To a banker it sounds like a
> > personality disorder.
> >
> > Sharon
> > ----
> > Sharon Villines in Washington DC
> > Where all roads lead to Casablanca
> >
> >
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