Always be honest and straightforward when dealing with a loan officer. It is better to reveal a problem up front and describe the steps you are taking to solve it rather than attempt to hide or disguise it. The truth always comes out.

1. A complete Offering Plan (the Prospectus or "Black Book").

Your offering plan describes the creation of your cooperative. It also contains lots of important information that will help a loan officer evaluate your property. If you do not have an offering plan because your cooperative self-converted or was built originally as a co-op, you should prepare a complete description of your property and its history.

2. A complete set of Amendments, if any; the latest Sponsor
          Disclosure filing is most important.

Amendments describe changes in the financial, legal, structural, or other aspects of your cooperative that occurred after the initial offering of shares. The most important amendments are the annual statements which every sponsor must file with the Attorney General until their ownership drops below 10%. Those "Sponsor Disclosure Statements" are requested by most lenders.

3. Copies of your Corporate Documents.

All lenders will require copies of your apartment corporation’s Articles of Incorporation, ByLaws, and Proprietary Lease. You also will be asked to provide a Certificate of Good Standing from the Secretary of State, which shows that your apartment corporation is still valid and that it has paid its state franchise taxes, and a valid Certificate of Occupancy, which shows that your building complies with local codes and ordinances.

4. Copies of Board Meeting Minutes for the previous 12 months.

Most lenders want to assure themselves that your cooperative is operating in a prudent fashion. They are especially interested in any issues which might effect your collateral or credit worthiness. Included in these minutes should be a board resolution authorizing the financing you are currently seeking and empowering the apartment corporation’s officers to execute all necessary documents.

5. Financial Statements for the most recent 3 years.

Financial statements give a picture of the fiscal health of your cooperative. By comparing results over several years, a loan officer can evaluate whether your co-op’s health is improving, stable, or deteriorating. It is highly recommended that your annual financial statements be audited. Audited statements have been reviewed and verified by a certified public accountant for completeness and accuracy.

6. Federal Tax Returns (IRS Form1120) for the most recent 3 years.

Prior to closing, most lenders will request the apartment corporation’s federal tax returns and then compare them to the financial statements.

7. The current Reserve Fund balance.

Most accountants recommend that a co-op maintain unallocated reserves equal to 2-4 months of the cooperative’s operating expenditures (including debt service). This account should function as the co-op’s contingency fund for unforeseen problems. The co-op should have additional reserves for any known repairs or planned capital improvements.

Be prepared with copies of the most recent statements for all checking, savings, money market, reserve, and investment accounts.

8. A Budget for the current year.

Your cooperative is a business, and you should run it like one. Therefore, you should have a financial plan that shows the effect of the new loan on your operations. Lenders are afraid of co-op boards who have not prepared a budget to guide their operations and expenditures. Likewise, most lenders expect that a board would have developed a budget for the new year by November of the current year.

9. A Year-to-Date Operating Statement.

If you are looking for a new loan during the middle of a calendar year, most lenders will request the most recent operating statement from your managing agent. They will compare this operating statement to your budget and to the most recent audited financial statement to make sure that your co-op is still financially sound. If your managing agent does not prepare monthly operating reports, you should consider changing to one that does.

10. A recent Maintenance Roll.

The maintenance roll should show each apartment, its type (e.g., 2BR/2 Bath, loft, etc.), its size or square footage, number of shares, monthly maintenance charge, and the name of its shareholder. The superintendent’s apartment also should be identified.

11. A list of Arrears.

Arrears or past-due maintenance charges should be shown by shareholder or apartment, along with an explanation of any large arrears, any legal action taken against the shareholder, and expected results.

12. A list of all Sublets.

This list should indicate the rent collected, the subtenant’s name, and lease expiration date.

It is very important to know the rent being charged in each sublet, if for no other reason then to substantiate the rental value of your apartments. To most loan officers, sublets suggest that apartments cannot be sold -- especially if the percentage of sublets is more than 10%. Therefore, the board should be prepared to identify all sublets and describe its sublet policy.

Most lenders qualify a sublet as any apartment which was occupied initially by its shareholder but now is rented to someone else. An apartment which never was occupied by its shareholder is an investor apartment, not a sublet.

13. A list of all Sponsor Apartments.

This list should indicate the rent collected, the tenant’s name, lease expiration date, and which units are subject to rent-control, rent-stabilization, or open-market rents. It is absolutely essential that you know the rents being charged in each sponsor apartment. Every loan officer will want to know whether the rent collected from these units exceeds the respective maintenance. It is also very important to know whether the sponsor has pledged any of the unsold shares as collateral for other financing.

14. A list of all Investor Apartments.

This list should show the rent collected, the tenant’s name, lease expiration date, and which units are subject to rent-control , rent-stabilization, or open-market rents. An investor apartment was purchased as an investment, not as a home; its shareholder never occupied the unit.

15. A summary of any Commercial Leases.

If your co-op has commercial space, you should prepare a schedule showing each tenant’s name, type of business, square footage, annual rent, expense pass-throughs and/or escalations (if any), renewal options (if any), and lease expiration date.

16. A copy of the Ground Lease, if any.

Some cooperatives do not own the land under their building but instead rent it from the sponsor or some other entity. If your cooperative has a leasehold, you should be able to provide a copy of the Ground Lease and a detailed description of its terms and conditions.

17. A list of apartment Resales during the previous 3 years.

This schedule should show each apartment sold, its sales price, number of shares, and closing date.

Apartment resales are one of the most important barometers of your co-op’s financial health. In fact, a history of regular and strong resales usually can off-set some of the less desirable aspects of your cooperative’s profile. Therefore, it is very important to maintain an accurate record of the transfer of every apartment. It also is important to explain the circumstances surrounding any discount or sub-market sale to prevent a loan officer from undervaluing your cooperative.

18. A recent MAI appraisal, if available.

As part of their underwriting process, most lenders will require a third-party appraisal from a Member of the Appraisal Institute. If your cooperative happens to have a recent MAI appraisal, you might be able to save some time and cost during your refinancing.

An MIA appraisal will estimate the value of your property using three methods: reconstruction cost, comparable sales, and estimated rental income. The rental income approach usually is given the most weight in determining the final value of your property.

19. An Engineering and Environmental Inspection Report.

Most lenders will require that your property be inspected by a licensed professional engineer for both physical and environmental problems, (e.g., old windows, leaky roofs, faulty boiler, asbestos, lead paint, or buried oil storage tanks).

Copies of recent reports regarding the presence or removal of asbestos, the testing or decommissioning of underground oil storage tanks, or Local Law 10 compliance would help the lender’s engineer complete this task more quickly.

20. A current Title Report.

In most cases, the cooperative’s attorney will not request a title report until after a new loan commitment has been issued. However, it is recommended that your attorney do a preliminary search of your title to make sure that it is free of Building Department violations, mechanics liens, or other encumbrances. Some of these items can take months to remove. Therefore, it is better to uncover (and solve) them early rather than be surprised by them two weeks before closing.

21. A copy of your Survey.

A survey is a plot plan of your property, showing its exact dimensions as well as the location of all buildings and other improvements. Most lenders will accept an updated and re-certified survey, but some insist upon a completely new one.

22. The cooperative’s Managing Agent.

Be sure to include the contact person, address, and phone and fax numbers.

23. A copy of your current Management Contract.

24. A list of building Personnel.

Please include their wage rates and a description of their duties and hours. The superintendent’s phone number also would be helpful.

25. Information regarding your Existing Mortgage Loan(s).

Please include the amount(s) outstanding, monthly payment(s), maturity date(s), prepayment provisions, loan number(s), and a record of mortgage payments for the previous12 months. Copies of the existing Note and Mortgage should be sent to the co-op’s attorney.

26. A list of recent Capital Improvements.

Please include all work completed within the previous 3 years. You should be able to tell a loan officer what you did, why, and the approximate cost of each item. This will indicate that you are maintaining your property in a prudent manner.

27. A schedule showing the intended Uses of Loan Proceeds.

This will include, for example, repaying the existing loan, paying refinancing costs, making capital improvements (list major projects and their estimated cost), replenishing the reserve fund, etc. It is recommended that every co-op have a five year-plan of major repairs and capital improvements. Your annual budget should include an allocation toward this five-year plan plus a contribution to the general reserve fund.

28. Your property’s Block and Lot number.

29. Your property’s Lot Dimensions.

30. Your property’s Assessed Valuation for the current tax year.

31. The status of any Tax Abatements (e.g. J-51, etc.).

Most lenders will underwrite your property without its current abatement or exemption to see whether it can support a full tax burden. You will receive credit for the abatement, but the terms of your new loan may be adjusted to provide for full taxes when your abatement expires.

32. Recent Photographs.

A picture really is better than a thousand words. The more pretty pictures you can provide of your property, the better. Be sure to include shots of the front of the building, several apartment interiors, as well as any significant amenities such as a swimming pool, tennis court, or clubhouse.

33. The cooperative’s Attorney.

Please include the firm name, address, and phone and fax numbers.

34. The cooperative’s Accountant.

Please include the firm name, address, and phone and fax numbers.

35. A list of all Corporate Officers and Board Members.

Please indicate one main contact for all refinancing issues.

36. Copies of your Insurance Policies.

Please include the name, phone and fax numbers of your insurance agent. Every loan officer will be interested in the amount of insurance protecting your property. This includes not only coverage against the obvious hazards such as fire and natural disasters but also liability coverage against suits from shareholders and other individuals. Most lenders also will require boiler insurance, rent and/or business interruption coverage, and directors’ errors and omissions policies.

37. If your cooperative has Ten or Fewer Units.

If you live in a small co-op, you also should be ready to provide a list of each shareholder’s social security number, place of employment or profession, approximate balance of any apartment mortgage, and its approximate monthly payment. In certain rare cases, it may be necessary to provide tax returns for every shareholder. This additional information usually is required from small co-ops because each shareholder carries a much larger portion of the total financial burden of the property. Therefore, in small co-ops, lenders are just as concerned about the financial health of each shareholder as they are about the finances of the cooperative itself.