Hi All -
Our co-op would like to keep shareholders' costs low while protecting the co-op. Our management company is asking as much as $1150 from shareholders seeking to take out a Home Equity Line of Credit. A five-page application asks shareholders seeking a HELOC for two years of tax returns and all their personal financial information, as well as letters of reference. It's not at all clear what judgment the management company would make based on this information. Additionally, apart from asking shareholders to black out their social security numbers on the paperwork, the management company has no way of keeping this confidential information secure. Shareholders understandably feel their personal information is no one else's business.
The bank has approved the HELOC. The management company is required only to provide a copy of the co-op's current insurance certificate. The management company says it must "protect" the co-op. Shareholders agree the co-op must be protected but don't see what protection is being offered by submitting their personal information, nor do they see why the fee should be so high.
The "application" would make sense for a purchaser in the co-op, but otherwise seems little more than a way for the management company to generate a fee.
What does your board do for a HELOC application? What's the legal issue here?
Thanks - Muddled in Manhattan
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