What Do Lenders Require from
an Association?
Not all lenders have the capability to lend to an association, however,
those that do specialize in association loans have established criteria
regarding the lending process. To gauge credit risk, lenders ask for
information about:
• Number of delinquencies, and the amount of money involved.
• Liquidity (the amount of cash as a percentage of annual
assessments and annual debt service).
• Number of units, and how many are owner-occupied.
• Whether monthly assessments will need to be increased to repay
the loan.
If a lender approves your loan, assignment of the association's assets
may include—but are not limited to—monthly assessments. It's
important to note that no liens are placed on individual units by the
lender. Typically, if the loan goes into default, the lender would have
the right to collect assessments directly from the homeowners. With
flexibility in mind, lenders generally structure association loans with
a non-revolving line of credit used during the construction phase
(typically six to 24 months long), with interest-only payments required.
This line converts to a term loan once the project is completed,
typically from five to 15 years in length.
Consider Associa Financial Solutions, Inc. Associa Financial Solutions,
Inc. has established relationships with several national lenders who
specialize in association loans, and also works with local lenders, as
needed. Associa Financial Solutions, Inc. will review your community
information and funding requirements to match your needs with the
appropriate lender.
