Does Your Lender Have HOA Experience?
Local vs Specialized
A catastrophe was recently avoided when an older HOA recently needed a substantial loan for some major common area renovations. They had been negotiating with their local bank, who had very little HOA lending experience. But the bank was so keen on maintaining the HOA’s checking account and many of the local member relationships, that they were determined to accommodate the request.
Knowing that their local bank had served them well, the HOA’s board decided to accept the loan terms without question. Both the HOA and the bank prepared themselves for a mutually favorable outcome. With winter fast approaching, the work needed to be done immediately. As they approached the funding date, the HOA’s attorney correctly and astutely pointed out that the HOA did not have the legal authority to pledge their common area real estate to the lender.
Where Decisions Are Made
The lender’s parent organization was based in a different state with different rules. Given their lack of nationwide experience, they underwrote and approved a loan with terms that simply could not be met. Fortunately, the HOA had reluctantly, allowed an experienced loan broker to bring a backup plan to the table. The broker had a relationship with a national experienced lender who was able to underwrite and close the loan without asking the HOA to pledge their common area as collateral.
Arch Capital Solutions acts as an advocate for your HOA. We have relationships with lenders who specialize in HOA loans.
In many states, the board may actually have a fiduciary duty to make financial decisions that are in the best interest of their members. Arch Capital Solutions can satisfy those fiduciary duties acting as the HOA’s financial advisor. We help HOAs obtain financing and choose the best proposal from multiple lenders.