Funding Baldy Mountain Townhomes Maintenance and Repair Projects For discussion purposes only, not a

1
Funding Baldy Mountain Townhomes Maintenance and
Repair ProjectsFor discussion purposes only, not
a loan commitment.

• Russ Ahrenholtz

Relationship Manager
December 17, 2007
2
Who is US Bank??

• Here in Summit County, we are the former WestStar
  Bank.
• On December 9, 2006 WestStar became US Bank.
• We have three branch locations here in Summit
  County
• Dillon
• Frisco
• Breckenridge

3
Who is US Bank??

• US Bancorp (NYSE USB) is the parent company of
  US Bank
• We are a customer and community oriented company
  providing a comprehensive line of banking
  products.
• You can learn more about us by visiting us on the
  web at usbank.com

4
Your HOA

• One of the purposes of your Home Owners
  Association (HOA) is the repair, maintenance,
  and upkeep of your facilities.

5
CASH!

• Like most things in life, those repair and
  maintenance projects undertaken by the HOA will
  require money.

6
From You!!

• A traditional HOA generates income through the
  collection of dues or special assessments from
  its members.
• TRANSLATION You as a member of the Association
  fund the HOA expenses and projects with your
  money.

7
From the money tree!!

• A major HOA expense typically creates a special
  assessment or increased dues from the members.
• For some folks (with cash or a money tree) that
  is no problem.

8
From Where??

• However, for many of us a major financial expense
  can also be called a financial hit that creates
  a money or cash flow crunch.

9
Some Solutions

• Here are several banking solutions to help you
  meet this financial challenge.

10
You to Bank - Direct

• You as an individual contact your financial
  institution and make arrangements to borrow the
  money directly from them.
• One popular type of financing for is type of need
  is a Home Equity Line Of Credit, or HELOC for
  short.
• With this type of loan, the equity in your
  residential property is used to collateralize a
  line of credit.
• You then draw or advance on the HELOC as needed,
  such as to pay HOA dues or Special Assessments.

11
US Bank - HELOC

• US Bank offers HELOC loan products.
• The HELOC may be secured by a 1st mortgage on
  your property, or by a 2nd behind your primary
  1st mortgage loan.
• The terms may include a 15 year draw period,
  during which the minimum payment required is
  interest monthly.
• Following the initial draw period, there is a 10
  year repayment period during which principal and
  interest payments are required to repay the
  principal on the loan.

12
US Bank - HELOC

• Interest rates are typically variable on HELOC
  loans.
• US Bank current HELOC rates are Prime minus .51.
  Prime is presently 7.25 which means HELOC rates
  are 6.74.
• Visit our branch location for complete details,
  required loan disclosures, and application/approva
  l information.

13
US Bank HOA Loan

• A second financing option is to utilize a loan
  program where your HOA establishes a Line Of
  Credit with US Bank.
• The HOA then may borrow the funds for the
  project.
• OR, the HOA may serve as a financial conduit
  borrowing on the Line of Credit and in turn
  making funds available to members for financing
  all or a portion of their individual HOA
  assessment.

14
US Bank HOA Loan

• If the HOA makes the decision to establish a Line
  of Credit, the application is started by
  supplying financial information to the bank.
• The bank completes a financial analysis of the
  HOA to determine loan eligibility.
• Income from future dues and assessments is
  considered when determining repayment ability for
  the loan.
• The completed line of credit loan is drawn upon
  by the HOA as needed.

15
US Bank HOA Loan

• Interest Rate is determined by several factors -
• Financial Strength
• Collateral Offered
• Repayment Ability
• We strive to keep the final rate competitive
  typically Prime -.5 to Prime .5

16
US Bank HOA Loan

• Loan Term Several different loan structures
  possible to meet the needs of the HOA. Typical
  terms include
• Initial draw period where funds are advanced as
  needed as the project progresses. Monthly
  interest payments are made on the balance
  outstanding on the loan.
• After the draw period the loan converts to a
  term loan, meaning that interest and principal
  payments are required to pay the loan off during
  a specified time period (term).

17
US Bank HOA Loan

• Loan Fees Fees for this type of loan typically
  include
• Loan origination fees are typically 1, but due
  to our existing and positive relationship we may
  be able to approve a preferential fee of .5 to
  .75
• Costs associated with any real estate offered as
  collateral, such as appraisals, title insurance,
  recording fees, etc.
• Any legal fees incurred on behalf of the HOA to
  make the deal happen. Those fees typically
  include By Law modifications. In your case,
  there may be no fees incurred in this category.

18
US Bank HOA Loan

• Loan Collateral Typically some combination of
• Real Estate owned by the HOA.
• HOA deposit accounts.
• Assignment of HOA dues.
• Assignment of HOA special assessments.

19
HOA HOA Member Loan

• The Application Process, Interest Rate, Term,
  Fees, and Collateral will all be determined by
  the HOA.
• The terms typically mirror the terms of the bank
  loan, with an interest rate spread or fee to
  cover administrative costs.
• Individual owners are typically required to
  pledge their unit as collateral for the loan.
  This may require an appraisal, a loan closing,
  and some recording fees.
• This process has been streamlined to be
  relatively simple, and has been administered by
  Wildernest Property Management.

20
Cost Comparison

• HELOC Interest only loan, 6.74 Interest Rate
• 5.62 monthly payment per 1,000 borrowed.
• HELOC 6.74 Interest Rate, 5 year repayment
  term
• 19.68 monthly payment per 1,000 borrowed
• HOA to Member Loan 7.75 Interest Rate 5 year
  repayment term
• 20.16 monthly payment per 1,000 borrowed