Question 1

What is the Loan Placement Program?

Accepted Answer

The Loan Placement Program provides an extensive marketplace for lenders to compete for your community’s loan. With a single point of contact and pre- qualification, it is a unique market solution that ensures competitive rates and support for all stakeholders.

Question 2

What are the highlights of the Loan Placement Program?

Accepted Answer

The Loan Placement Program provides a loan to the Association, not the individual. It is not a mortgage and there is no lien on individual units. Board Members sign the loan in their capacity as Board Members.

Question 3

What is the collateral?

Accepted Answer

The collateral is a pledge of assessments. If the association's payments to the lender are current, there is no effect on the association. If there is a default, then, and only then, the lender will have a right to collect the assessments from the members and apply those sums to the payment of the loan.

Question 4

Will a loan impact the ability for owners to sell their units?

Accepted Answer

Lenders for this type of loan are not involved in the individual resale of units.

Question 5

What are the benefits of getting a bank loan?

Accepted Answer

Loans enable a community to address funding gaps. Loans are often more palatable to owners than a large assessment, and potentially more cost-effective than a phased approach to completing necessary projects.

Question 6

What are the costs associated with receiving a loan?

Accepted Answer

Loans involve interest cost to the bank and closing costs that include the communities attorney, transactions fees and bank legal review.

Question 7

What is the length of the loan?

Accepted Answer

Typical loans range in time from 5 to 15 years. Longer term alternatives may be available on a limited basis.

Question 8

What are the loan structures for Community Associations?

Accepted Answer

here are two typical loan structures. The first is a term loan whereby there is no interest only period. Instead, principal and interest payments begin immediately after loan closing. This is usually the most cost-effective option. For this option, funds are typically given to the association at closing and the Association uses the funds as they would regular reserve funds. The second option is a loan with an interest only draw period followed by a predetermined payback period. The loan starts from $0 after which the association completes draw paperwork to draw funds until sufficient funds have been drawn to complete the project. The maximum interest-only period is usually 12–18-months. This type of structure may require additional lender fees due at closing.

Question 9

How do associations plan to repay the loan?

Accepted Answer

Associations evaluate the financial impact to owners when selecting how to repay the loan. Three options are usually considered:

Build repayment into the regular budget, oftentimes increasing common charges.
Implement a special assessment to match loan payments.
Offer a hybrid approach where some owners prepay upfront while others participate in the loan. In this scenario, owners participating in the loan will have a monthly loan assessment in addition to their regular assessment. This approach has the advantage of giving owners flexibility while still providing a financing option to owners who need it.

Question 10

Are associations pleased they placed loans with the program?

Accepted Answer

Overwhelmingly, yes. The program provides association boards additional flexibility to address funding gaps while also providing competitive rates and support throughout the entire loan process.

Question 11

What is reserve cash management?

Accepted Answer

Reserve cash management is the process of actively monitoring and maximizing community reserve funds. Proper financial management includes analyzing cash balances, identifying earnings opportunities, reporting, and ensuring liquidity as your community requires.

Question 12

Is this a broker or money manager service?

Accepted Answer

No. The platform accesses a preferred network of financial institutions that specialize in helping Community Associations maximize interest income for their communities.

Question 13

What are the benefits of this program if we work with a financial advisor or broker already?

Accepted Answer

This program does not require you change any existing relationships. We find it advantageous for our communities to have access to multiple value-added products and services. We are pleased to offer this program as Community Associations selecting the platform’s CDs and money market accounts earn greater interest income compared to most alternatives.

Question 14

Are there fees associated with this program?

Accepted Answer

Fees may be charged for the placement of Certificates of Deposit. Access to the platform’s money market network is paid for by participating financial institutions and partners.

Question 15

Does the management company earn compensation from this program?

Accepted Answer

The platform provider may share compensation it earns from participating financial institutions and partners with the management company to offset costs for its assistance in administering the program.

Question 16

Do these alternatives provide FDIC coverage?

Accepted Answer

Yes, all participating financial institutions provide deposit insurance through either the FDIC or the NCUA. Several institutions also provide full insurance coverage above standard limits, allowing a community to be fully insured regardless of total cash balances participating in the program.

Question 17

Who is Ampersand, Inc.?

Accepted Answer

Ampersand, Inc. is a financial services firm revolutionizing deposit management – partners with CommonArea to offer you industry leading rates and unparalleled service. With Ampersand, you ensure the safety of your deposits while unlocking their full potential. Ampersand, also known as Ampersand Public Advisors, LLC., is a registered Municipal Advisor with The Municipal Securities Rulemaking Board (MSRB) #K1337.

Question 18

Who is American Deposit Management (ADM)?

Accepted Answer

American Deposit Management (ADM) participates in the platform’s financial institution network. It specializes in offering nationally-competitive rates for CDs and money market accounts. The company manages over $6B in assets. ADM is a municipal advisor registered with The Municipal Securities Rulemaking Board (MSRB) #K0353.

Question 19

Why does your analysis exclude our operating and short-term maintenance reserve accounts?

Accepted Answer

Capital reserve fund accounts require special attention and should have a strategy separate from those funds needed to operate the community on a day-to-day basis.

Question 20

How are financial institutions selected to participate in the program?

Accepted Answer

We are highly selective in inviting banks, credit unions, and other financial institutions to our cash and reserve management program. Our partners have decades of experience working with Community Associations to maximize their investments. Among other criteria, financial institutions are selected by evaluating both their technical capabilities and financial stability using Kroll Bond Rating Agency (KBRA) financial intelligence ratings. For additional information, visit www.kbra.com.

Question 21

How is community information kept secure?

Accepted Answer

All community data is handled in compliance with strict financial institution guidelines. Data access is limited to authorized individuals or organizations.

Question 22

Who are the signers on these accounts?

Accepted Answer

Board Members are usually the signatories. Per federal regulations, signers on accounts will be required to provide their social security number, date of birth, and a copy of their driver’s license or passport. If Board Members do not want to provide their personal information, our company’s representatives will be signers for the accounts.

Question 23

What is CommonArea Financial?

Accepted Answer

We are industry veterans who set out to improve the financial health of communities. We do this by empowering managers and their communities with tools to drive better financial outcomes (i.e., incremental, compounding revenue!!).

Question 24

How do you deliver 2x the investment earnings than previous solutions?

Accepted Answer

We built the only platform specifically designed for community managers to easily and actively manage reserve and cash investments. Our clients - who manage over 7,000 communities - are doubling their communities' annual earnings by getting the best rates with the only financial marketplace tailored to the needs of the industry.

Question 25

Do you work with my bank?

Accepted Answer

Most likely! Our marketplace offers over 500 FDIC-insured, community association-focused financial institutions. If you don't see your bank, we can invite them to our platform. Additionally, our program does not require you to change any existing relationships.

Question 26

What investment products do you offer?

Accepted Answer

CommonArea's marketplace only provides products that will not lose principal. We offer CDs and Money Market accounts with great returns so your communities can plan their budgets with confidence. All deposits are insured through FDIC or NCUA.

Question 27

It is easy for boards to lose track of maturing CDs. How do we combat that?

Accepted Answer

We send alerts for CDs coming due - plus any custom hot opportunities for investing community cash - and then serve you custom investment opportunities in a board-ready report.

Question 28

Are there fees?

Accepted Answer

The CD and Money Market rate is net of fees, so there is no fee charged to communities or managers. For loans, there is a fee for loan placement.

Question 29

Is CommonArea a one-stop shop for association investments?

Accepted Answer

Yes, the digital tools organize data and create efficiencies while the network of association banks offer nationally-competitive rates for greater earnings. No need to call around for rates and create a document for boards.

Question 30

Can you help us get a loan?

Accepted Answer

Yes! Our platform will pre-qualify your association based on standard underwriting guidelines. The board will be presented various options, allowing you to select the best choice for your community's needs.

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