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.

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.

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.

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

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.

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

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

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.

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

1. Build repayment into the regular budget, oftentimes increasing common charges.

2. Implement a special assessment to match loan payments.

3. 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.

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.