Condo Media - August 2013 - 31

cases where community associations
expect to recover the costs from the developer or builder — eventually — both
banks will approve the loans they need to
begin the work.
“We’re not afraid of those loans,”
Blair says. “When and if the association
wins its suit, it can use the damages
awarded to repay the loan.”
Rockland Trust is also comfortable
with these loans, Himmel says, “but
we want to know how far along they
are in the litigation, and what the
legal fees are likely to be.” Sometimes
those fees can exceed the amount
required for the construction work,
Himmel notes, and the bank wants
to be sure the association can repay
the full amount of the loan if they recover less than they expect or recover
nothing at all.
Neither bank will finance a community’s operating expenses — “the
community has to be able to pay its
bills,” as Himmel said. Blair agrees
and applies that policy strictly, refusing
loans to communities with cash flow
problems resulting from foreclosure
processing delays that temporarily
reduce revenue from common area
fees. Those are operating funds that associations need to replace by increasing
common area fees or levying a special
assessment, Blair says. “The bank won’t
finance them.”
Brookline Bank also won’t finance
insurance premiums, although, Blair
notes, “a couple of Florida banks have
figured out how to do that,” nor will
it loan an association money to build
up its reserves. However, if a community has used reserves to finance the
beginning of a capital repair project,
the bank will finance 100 percent of
the construction costs, allowing the
community to replace the reserves it
has tapped.

found loans for his community association clients “very easy to get.”
The application process is straightforward, Himmel agrees, but the loans
“aren’t cookie-cutter. Every association
is different,” he notes, and those differences are factored into the loan review.
Strengths in some areas (well-funded
reserves, for example) might offset
perceived weaknesses (such as a high
delinquency rate) in others.
With a condominium loan, as with
any loan, the lender’s primary concern
is the ability to repay it. To make that

determination, lenders consider:
the community’s size. It has to be
large enough to make the percentage
share of the loan affordable for owners.
Brookline Bank will consider loans for
communities as small as five units, Blair
says, “but we won’t approve large loans
for them.” Rockland has no official
minimum association size, but loans
for communities with fewer than 10
units are very difficult, Himmel says.
And the bank will look more closely at
delinquencies and reserves at smaller
communities.

Into the Mainstream

Growth has brought condominium
loans from the banking fringes into the
mainstream, standardizing the approval
process and making it seamless for
most associations. Monahan says he’s
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