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Subject: HOA Loan Banks for Illinois
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Author Messages
FirstL3
(Illinois)

Posts:6


04/06/2017 5:51 AM  
Hi,

Our management firm recommended to take out a HOA loan for replacing the roofs.

Does anyone have experience with this process?

There doesn't appear to be a lot of online transparency on the loans (e.g. rates to compare). What loan providers in IL should I consider? Any ideas what the rates are currently, and who tends to be most competitive?
SheliaH
(Indiana)

Posts:1692


04/06/2017 7:06 AM  
We've never taken out a loan, but I would start with talking to the HOA's bank to see what's involved. Like any other bank loan, they'll want to take a look at your financials, so you need to be sure they're on point. For instance, if you have a high delinquency rate, that could affect your ability to get a loan because your cash flow may not be consistent enough to pay regular bills, fund reserves and pay a loan with interest. You might also check the Community Association Institute's website - some of their corporate members are banks who specialize in HOAs, and they may have a branch in your community.

Has your board considered a special assessment instead of a loan? Before going the loan route, has the Board considered a special assessment? Those aren't fun either (they will require a homeowner vote), but if you prepare your argument carefully, show homeowners the numbers and what's at stake, along with holding a special meeting (or two, maybe three) where people can ask questions, that may work out better than getting a loan.

If you do have to take out a loan, that may be due to your not having a reserves fund at all or it's severely underfunded. Regardless of how this ends, be sure you get a reserve study if you don't have a current one (you should be getting them done every 5 years) and begin to use it to set your budget. Hopefully, that'll prevent you from having to consider a loan in the future.

TimB4
(Virginia)

Posts:13855


04/06/2017 7:32 AM  
Do you not have enough in your reserves to do the work?

If not, when was your last reserve study?
FirstL3
(Illinois)

Posts:6


04/06/2017 5:49 PM  
I believe the last study has been done about 3 years ago. The reserves can not cover the entire project.

JanetB2
(Colorado)

Posts:2665


04/07/2017 10:25 PM  
You potentially need to look at doing a better Reserve Study and increasing your HOA dues. Your HOA in the future should be in the position of doing necessary work as required by your CCR's without Special Assessment or taking out Loans.
RonaldD1


Posts:0


04/08/2017 12:48 AM  
I agree.
FirstL3
(Illinois)

Posts:6


04/08/2017 5:44 AM  
I agree. However, In the short run we have no option to take out the loan.
JohnC46
(South Carolina)

Posts:6437


04/08/2017 6:46 AM  
One HOA I was in took out a large loan with a bank and each owner was assessed a specific amount with several options to pay it off. Basically the options to each owner were pay it all now with no interest of finance it with the bank over a period of years (5 at the most) with interest. The HOA got their money up front from the bank.
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Forums > Homeowner Association > HOA Discussions > HOA Loan Banks for Illinois



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