Graduating from HUD FAQ #1

April 10, 2022 at 6:00 PM -- a Second Sunday Community Forum

-- resident discussion - not affiliated with Concord Village, Inc --

Event Information

  • Topic: Graduating from HUD - FAQ #1

  • Location: Zoom ID# 933 5410 2390 / pw = sunday (or click here:

  • When: Sunday, April 10, 2022 at 6:00PM

  • Host: Rich McComas, cell 480-755-1155,

  • Format: Informal, no topic order, coffee klatch style -- <40 mins so "share the time"

  • Rules: Be prosocial, no public shaming, don't talk over each other

  • Disclaimer: resident discussion - not affiliated with Concord Village, Inc

Talking Points

The purpose of this meeting is to start to build a FAQ document about the HUD payoff and what it means for our members. Below is a quick list of questions shared by members on this topic so far, with some answer notes from people who have looked into the question in the past. The end-goal is to share these questions with experts, attorneys, CPAs, HUD employees, housing coop experts and associations, mortgage firms, real estate agents, other coops who have transitioned, so that we can develop some more authoritative expert-validated answers to these questions.

Hundreds of limited equity coops and many tens of thousands of coop members in the US have already realized the dream of home ownership and/or the creation of "generational wealth" by buying into limited equity coops like ours, which when their original HUD loans were paid off in 30-40 years, converted into fair market value coops or deeded condos.

Unfortunately, Concord Village experienced a bit of a financial hiccup in the mid-90s, caused mostly by our desire to keep carrying charges ultra-low in the 70s, 80s and 90s. This resulted in a failure to plan for future needed repairs and renovations, and finally lead to us reborrowing the full amount of our original loans in 1996 and extending our loan payoff to 60 years instead of 40. While other nearby coops raised their carrying charges gradually as they created reserve studies and planned for repairs and renovations, Concord Village's carrying charges stayed artificially low, so we found ourselves cash strapped when we needed to fix some things.

But, the mid-90's fiasco is now long behind us, and now by the end of 2026 (less than five years away), our long wait to convert to either fair market value coops or convert to deeded condos will be finally over. And it couldn't come at a better time as the housing market for townhomes along Scottsdale Road has literally exploded. Whereas our units were only worth $50K-100K when the original loans were paid off in 2005 to 2007, they will each probably be worth well over $200K when the HUD loan is finally paid off in a few years. For most people here, this will be a huge windfall in equity, maybe enough to pay for retirement or elder-care expenses, or enough to actually pass on real wealth to the next generation of our families.

This recent article in Fortune talks about how Phoenix-Mesa-Scottsdale is the #1 market in the US for middle-class families to build generational wealth through home ownership:


Many dozens of questions from members about "Life after HUD" are listed below, and it can be a bit daunting to draft or even just read about to every old or new concern or rumor or misunderstanding about this or any issue, especially something that so significantly impacts the value of our investment in this community. So, for those who don't want to get into the weeds on this, here is a simplified five-bullet synopsis:

  1. In January 2027, after the HUD loan is paid off, we will be required to remove the HUD provisions from our governing documents, and at the same time, we can vote to remove the limited equity provision

  2. We can then sell or transfer our units to whomever we want for any price we want, probably about $200K per unit on average (the buyer or inheritor just need to pass a background check)

  3. Nothing else needs to change. Everything else is optional.

  4. Members will not to pay any fees for this, and we don't NEED to ever sell our units, and our costs will likely go down, not up, as a result of this change

  5. Hundreds of limited equity coops (and many tens of thousands of members) have paid off their HUD loan in recent years and moved to fair market value. It is simple and it was anticipated and planned for from the day we were founded. This event is the reason Concord Village that was created, an opportunity for low-income families to achieve *real* home ownership.


  1. When will the HUD loan be paid off?
    - Jan 2027

  2. Might I be required to sell my unit and move?
    - No, it belongs to you and always will, unless you individually sell it or give it to someone

  3. How much are our units worth at fair market value?
    - $15oK to $250K each - more details available from several real estate firms who specialize in Arizona coops

  4. Do we deserve this potential windfall
    - Yes, most of us invested all or part of our entire life savings to buy into Concord Village, often paying as much to buy our membership here as the homeowners around us paid for their down payments on their houses. If the area has gone up dramatically in value, we all deserve a similar reward from our investment.

  5. Will the change cost members any money?
    - no, we already own our shares (we do not need to re-buy what we already own)

  6. What is the simplest form of the change to move to fair market value?
    - remove governing docs references to HUD, under income, limited equity, and waiting list

  7. How long do we have to wait to go to fair market value?
    - no waiting period after loan is paid off in January 2027
    - alternatively, we could end the HUD regulatory agreement earlier than 2027 if we refinanced through a bank or though a different HUD program (at a lower interest rate than we are currently paying, if we don't wait too long)

  8. How much do we owe on our HUD loan today, and what does our loan cost per month?
    - $1.35M as of April 2022, payments of $26,442/mo or $71 per member per month

  9. Will HUD continue to work with us after the loan is paid off?
    - no, a HUD loan and regulatory agreement is required
    - additionally, HUD has said that they will *not* back any more loans for Concord Village, nor will they allow us to extend the payoff date beyond 60 years

  10. If there is no waiting list, how might we sell our units when we move to fair market value?
    - hire a real estate agent, or sell it yourself -- the usually sell pretty quickly
    - one local real estate agent has experience selling >300 nearby coops

  11. Can my over-income and/or single children inherit or be transferred my unit after the loan is paid off
    - yes, you will be able to transfer your unit while alive or upon your death to anyone who passes the background check

  12. Can I sell my unit to pay for elder-care expenses
    - yes, you will probably be able to sell your unit for $100K to $200K or more, for elder-care expenses, or to retire

  13. Will our carrying charges go up?
    - unlikely and maybe never again -- our loan costs us $71 per member per month, and that will go away
    - other savings could mean $100 or more in lower expenses per member
    - I recommend keeping carrying charges the same and putting the $100 excess into reserves till a formal reserve study demonstrates otherwise

  14. What does HUD do for us that we will lose?
    - advises managers on fair housing rules, which most professional multi-family property managers know about

  15. What does HUD require that we will not have to do?
    - annual REAC inspections
    - annual occupant recertification and inspection
    - forcing occupants to be inspected and then pay for unit repairs or face eviction

  16. Will we have to pay the full price for new Air Conditioning units?
    - no, in fact, other nearby coops pay for entire A/C unit, requiring nothing from member

  17. Will we be required to pay for roof repairs?
    - no, nothing changes regarding who pays for what with this change

  18. Will we be required to pay for plumbing?
    - nothing changes, although other nearby coops pay for all plumbing issues, both behind the wall and out. At Concord Village, members pay for so much more than other coops typically ask members to pay for, because of past board decisions that may or may not make sense today. So, we can go back to original and more typical coop programs where the village pays for all standard plumbing repairs, except for repairs to plumbing changes installed by the member.

  19. Will members be required to pay for water or sewage directly?
    - nothing needs to change here, even if we change to deeded condos

  20. What expenses will likely go up or down after the change?
    - personnel is our #1 cost, which should go down, less needed for HUD paperwork
    - loan payment and mortage-related costs is our #2 cost, which will go to zero
    - other expenses will remain the same

  21. Can we hire our own manager and/or a less expensive management firm?
    - yes

  22. Will the occupancy agreement change?
    - yes, HUD sections removed, any other changes are optional at board or membership vote discretion

  23. Will any of the rules change automatically?
    - no, unless HUD is mentioned -- all rules changes are made by the board and/or membership vote

  24. Will any of the occupancy terms change automatically?
    - no, unless HUD is mentioned -- all occupancy agreement changes are made by the board and/or membership vote

  25. When I move, can I sell or give my unit to a low income family and pass on the benefit of affordable housing?
    - yes, you can individually sell or donate your home to whomever you wish (as long as they pass the background check)

  26. Will our property taxes go up after the HUD loan is paid off?
    - no, we are already being charged full market value property taxes (paying more than other nearby fair market coops)

  27. How many votes do we need to change to change the bylaws?
    - according to the bylaws, "majority of the entire regular membership of record at any regular or special meeting," which has been interpreted two ways, either focus on "entire regular membership" or focus on "at any regular or special meeting"
    - the last bylaws change in 2011, attended and supervised by our attorney, was voted in by a majority of those "at the meeting" (actually, only a small handful of people)
    - ideally, I think we should seek 137 votes to make the change (majority of the entire regular membership).

  28. Can we remove the limitations on medical marijuana?
    - yes, if the board or membership votes to remove it -- it will no longer be required
    - we could still ban recreational use if we want (quite complicated in my opinion)

  29. Who will I complain to if I can't call HUD?
    - HUD rarely gets involved in member complaints since Kathy Dehler retired, unless it is a fair housing issue
    - fair housing protections will still be in place, which is the #1 reason HUD gets involved, so members will just need to complain to the more direct and appropriate federal state offices if there is a problem


  31. What does the 10 year corporate existence clause mean in our bylaws?
    - designed to allow HUD or someone else to sue the village later in the event of fraud, etc

  32. Can the entire village be sold to a developer by the board before or after the HUD loan is paid off?
    - not feasible before or after, any single member could sue to stop it

  33. Will people start renting their units after the loan is paid off?
    - no, allowing renters would require a vote (which other nearby coops have not allowed)

  34. Will people be able to borrow against their units to do remodeling, etc?
    - not unless CV creates a collateralized share loan agreement with a coop bank
    - however, indicating the fair market asset value on a loan app may help qualify for a personal loan

  35. What is the issue of with the 40-year limited Equity table in the bylaws?
    - The bylaws assume we go to fair market value after the original loans were paid off after 40 years, so there are no scheduled "limited equity" increases after 2005 to 2007 (the payoff dates of those loans)
    - What has been done since 2005 is completely arbitrary, outside of the bylaws, and the new math just doesn't make sense (probably a spreadsheet error)

  36. How does nearby re-development affect our unit valuation?
    - As we become full-equity homeowners, it is important that we start reviewing nearby development projects the way that other area homeowners evaluate them, participating in zoom city council meetings, etc.
    - Most area redevelopment projects can increase the value of multi-family housing projects like ours, but traffic jams on Scottsdale road might have a negative value impact
    - in general, adding more rental units decreases our value, but adding more deeded condos or homes increases our value
    - Our local schools are currently very highly rated, but increasing density or decreasing funding changes the value of our units

  37. What are the tax consequences of selling my share in the coop?
    - consult a CPA, but most advise that the sale of a coop is treated like the sale of a deeded condo or home
    "If this is a primary residence, and you are single, and have lived in the unit for two out of the last five years,” Lebenhart continues, “you can exclude $250,000 from capital gains taxes. If you are married and filing jointly, the exclusion goes to $500,000.”

  38. What is a collateralized share loan?
    - some coops allow members to put up their certificate as collateral, which makes it easier to borrow money to buy a unit from a member, or for a member to borrow money to remodel their unit, etc.
    - share loans are often limited to 50% of the value of the unit, but some coops allow more or less
    - share loans usually require a special agreement between the village and the bank, because the way they are structured, if one member defaults, technically everyone else (ie. the coop) becomes responsible for repayment of the loan -- if there is a downturn and many default, then the coop may have a credit or cash-flow problem.
    - if a member defaults on their share loan, and the bank "forecloses," then the member needs to be evicted which can take quite some time (think back to the pandemic when there was an eviction moratorium). Under normal circumstances, eventually, the unit will be resold and the village will be made whole, but the process can be long and messy.
    - Even during the 2008 mortgage crisis, the worst period of home and condo loan defaults in our history, we didn't see reports of mass share loan defaults that created unrecoverable problems for coops, but the worry is always there

  39. ** Would moving to fair market value (or deeded condos) allow us to be self-managed?
    - ** Yes, the only reason we are managed by a HUD-authorized off-site management firm today is because HUD requires it. This is a fairly new requirement from HUD from 2007, implemented because in both the 1990s and in early 2000s, we had serious problems with our managers, and HUD determined that our boards were not able to effectively supervise our managers.
    - ** This requirement goes away when our HUD loan is paid off.

  40. ** Without HUD, how will we be protected from boards who want to increase carrying charges?
    - ** Thousands of coops around the country have figured this out, and tens of thousands of HOAs have figured it out. One member at the meeting said she worked with hundreds of HOAs in HOA management, and they all had protections in their bylaws about what could be done by the board regarding monthly dues (without a member vote, etc)

  41. ** What are the upsides of paying off the hud loan other than the financial benefits (ROI, more value, lower costs)?
    - ** It is probably worth asking some of the coops who have completed this transition what some of their other anticipated and unanticipated benefits and problems were.

  42. ** Should we try to borrow the $1.4M from the bank or via a different HUD program and convert to fair market value now?
    - ** Ultra-low interest rates are one reason to consider this change right now, potentially dropping our remaining loan from 4.5% interest to about 3%.
    - ** Another reason is to protect the interests of members who have lived here dozens of years and who may need to move before we go to fair market value. One examples is a member who has cancer and doesn't think she will last five years, and wants to give something of value to her children. Another is someone who is facing a move to a nursing home and would like to use her unit to pay for eldercare costs. Both examples are members who feel they "should" have realized this fair market value opportunity 15 years ago, but it was snatched from them when we extended the loan to 60 years.


  1. Where are the other Arizona coops
    - two are a couple of miles East of us on Roosevelt, each complex with hundreds of units
    - three are in central Phoenix, two projects like ours, and one tower
    - two are in Tucson (built as one project in two parts)

  2. Are other coops having troubles selling their units at fair market value?
    - the nearby coops sell quickly for $100K to $200K for smaller units not just off Scottsdale Road
    - most of the coops in Arizona have either no units currently for sale, or just a handful available

  3. Will buyers be able to borrow money to buy into the coop?
    - no Arizona banks offer "share loans" so it would need to be a personal loan, or maybe an out-of-state bank loan
    - even if share loans were possible in Arizona, the other coops would probably avoid them, preferring to move to deeded condo conversions if the prices for the units got so high that it became difficult to sell them for 100% cash

  4. Will anybody be able to buy a unit, even criminals?
    - if we remain a coop, we can have all the same background checks, etc

  5. Did the other coops increase their transfer fee?
    - yes, they charge $1000 to $2000, or a percentage, or a hybrid, which keeps everyone else's carrying charges low
    - if we charged 1-3%, it would allow for free transfers for inheritance or family transfer purposes, and allow all members to benefit from the windfall profits of those who sell at a huge profit.


  1. What are some advantages of deeded condos with an HOA versus a coop?
    - the value of our units will be higher, maybe a lot higher
    - purchasers and existing owners can borrow money from a bank to buy in
    - deeded condos often sell twice as fast as coops, which isn't a problem when units sell in days with competing offers, but that will change over time, especially as interest goes up, and as the area supply of multi-family housing increases as other re-development projects are completed
    - as housing prices rise, it will be ever more difficult to sell a coop that requires payment in full with no loans possible

  2. What are the possible challenges and downsides to deeding our units?
    - will require a real estate attorney to address a myriad of details
    - need city approval, need to verify that units are up to code
    - probably needs 60-80% member agreement, with needs of everyone accommodated (no increased costs, etc)
    - property taxes will be paid directly by the owner and may go up as units are sold to new buyers
    - property taxes could also go down with proper abatements, especially for elderly or handicap owners, or if we move to designate Concord Village as a "historic district" (now that we are 50+ years old)
    - property insurance would be required to secure a loan
    - need to clean up our liens to get clear title so that we can subdivide

  3. How complex is the conversion from a coop to a condo?
    - we are currently classified by the city assessor's office as an apartment complex
    - apartment to condo conversions can be fairly simple, happen with some frequency, and are generally approved by the city
    - individual deeded condos are considered by the city to be more desirable than apartments, as they generally return more tax income for the city over time as people can borrow to remodel and improve their units, which increases the resale value, etc.
    - - "As of 2010 the trend of apartment complexes converting into condos is gaining momentum. The low interest rate affliction that has crippled apartment fundamentals for several quarters is driving the biggest condominium conversion boom in two decades. In markets across the country, condo developers are paying a premium to acquire and transform rental properties into condos."
    - I believe that we are appropriately zoned for our density so that isn't an issue

  4. How much would deeding our units as condos increase their value vs staying a coop?
    - nationwide +10-20% - local real estate agent says 50-100% more because of location and lack of share loans in AZ

  5. Will deeded units allow renters and absentee owners?
    - not required, but many modern HOAs allow 10-20% renters
    - allowing some renters with very high qualification standards can keep standards high while reducing everyone's carrying charges (ie. office charges 20% to manage rentals)

  6. Will we need to pay for A/C if we move to deeded condos?
    - every Condo HOA is different on this, but most new construction configured as "town homes" do ask members to pay for all or part of A/C repairs or replacements. However, because this isn't new construction and all of our units will start with differently aged HVAC units, we could decide to continue the coop model on this if we want where the occupant pays nothing on A/C costs. Or we could do a transition, estimating the average life of an HVAC unit as 20 years, so in the first year after the condo conversion, the owner pays 5% or the repairs or replacements, and in the tenth year, the owner pays 50%, and starting 20 years or later after the transition, everyone pays for their own HVAC replacements.

  7. Will we need to pay for roof replacements or repairs if we move to deeded condos?
    - it is up to us to decide about repairs, but condo HOAs usually pay 100% of roof repairs and replacements (zero paid by the members)

  8. Will we need to get separate water meters?
    - no, many condos, even newly built condos, share water expenses. "Homes" in HOAs have different meters because some people have large lawns and pools, and other members don't want to share their water costs. You can imagine that many multi-story condo HOAs share the costs of water, roofs, HVAC, etc -- so sharing costs like we do in a coop is very common.
    - **the downside of sharing a water bill is that if some members have a large family that takes long showers and other are single and take short showers, we will each be paying for average showers.
    - **there is also some concern that not all units have outside spickets, but it sounds like that doesn't need to be fixed before going condo (no city code on that, as many condos have upstairs units with no spickets, etc).

  9. Would our corporation remain a non-profit after conversion to condos?
    - yes most HOAs are non-profits

  10. Can we do this in two steps, first fair market value coop, then deeded condos later
    - yes, that is probably advisable, but we must not allow collateralized share loans if we want to move to deeded condos later
    - in order to deed our units, every share loan would need to be paid back and reissued as a mortgage, but if just one person doesn't any longer qualify for a replacement loan (lost their job, etc), that would stop the entire deal for everyone
    - a real estate agent who is on a coop board estimated that in the current frenzied market, our larger 3-bedroom units might be worth $250K as fair market value coops without share loans, but could be worth $500K as deeded condos that allow a percentage of rentals

  11. What are special assessments, and how will we address them?
    - there are two ways that HOAs pay for major or unplanned improvements, either through special assessments or through increased dues. Most opt to keep dues ultra-low because low dues increases the attractiveness and resale value of the condos, and because special assessments decrease the owner's tax liability upon the sale of a unit.
    - because CV is attractive to many people on a fixed or low-income, some owners here will not be able to afford a large one-time special assessment. Therefore, if we convert to condo, our HOA CC&Rs should probably state that if there is a special assessment, that owners on a fixed or low income should be able to finance the assessment at lowest market rates, and/or not pay anything until their unit is sold or transferred down the road.

  12. If we convert to deeds, will I need to buy my condo from the village, and if so, how much?
    In most apartment to deeded condo conversions, the tenant becomes an owner by purchasing their their condo from their existing owner. At Concord Village, however, we are BOTH the tenants and landlords, so we will just swap out our membership certificate for a deed. The village may incur some fairly significant legal fees, code inspection fees, and escrow fees to guarantee individual title, but the coop could absorb those fees as a cooperative expense and do a zero-dollar deed transfer for everyone.

  13. What are some other significant legal differences or "possible" differences between an deeded Condo HOA versus a Coop?
    - Once deeded, we will own the inside of our units - right now the coop owns everything
    - Once deeded, we will each individually be responsible for our own property taxes
    - With an HOA, we will have a little less control over who lives here - for instance, a person with bad credit cannot join the coop today, but a person with bad credit can pay cash for a deeded condo.
    - Although this is unlikely for us, some East Coast coops are quite exclusive and allow existing members to "vote" on who can buy in, giving existing owners a great deal of control.
    - Although this is unlikely for us, some high-end coops can reject a low sale price if they feel it might impact everyone's value, but an HOA cannot do this.

  14. Will moving to deeded condos better protects us from harmful board or management decisions?
    - Deeded owners in an HOA have more power and greater legal protections from roque boards and/or managers who want to make radical changes. As a result HOA CC&Rs are usually changed less capriciously than coop rules and regs.

  15. Can an Arizona HOA prohibit registered sex offenders and other types of serious felons?
    - Yes, unlike other states, level II sex offenders can be prohibited as per a new Arizona law from 2014 - A.R.S. §§ 33-1260.01(H) and 33-1806.01(H).

  16. What is the difference between an HOA and a Condo Association?
    - The biggest difference appears to be that when you work with homes instead of condos, the homeowner also generally own their land, but in a condo association, the underlying land is a shared asset. In some states, however, the legal differences are spelled out in great detail, and in those states, a condo association tends to be structured more like a coop than an HOA (rules, bylaws, board, etc). We need to do more research about the legal differences in Arizona, if any, other than who owns the land --

  17. Was there a historical document which promised that each member would receive the unit they occupy when the loan is paid off?
    - ** one member whose family has lived in the village since 1968, recollected that there was a document promising the specific unit to be owned by the family living in them, but since most historical documents have been lost, no one else offered that they were aware of a specific document saying this.

  18. Who will pay the cost of bringing the units up to code if that is necessary?
    -** it was expressed that many people here are on a fixed income and could not afford to bring the units up to code if that was required for a deed. The specific issues mentioned were electrical and plumbing
    - ** regarding electrical, it is believed that part of the village was upgraded to copper wiring before the village ran out of money for the uprade. Then this was changed to adding copper tips to the wires to bring them into code, but we aren't sure how much of this was done. Later Rich asked someone who did this, and was told that the tips were $3.50 each and the maintenance staff installed them (no electrician required) --
    - ** the cost to bring the village up to code should be evaluated, and maybe those costs should be born by the village so that if we move to deeded condos, everyone starts at the same starting point

  19. ** What is the status on revised Arizona regulations which might make it more difficult for a developer to buy the village if we were deeded condos?
    - ** Apparently, there is a law that (ARS 33-1228 Arizona Condominium Termination law) that allows investors to buy up a certain percentage of condos and force out the rest of the people, which has affected five Arizona communities causing everybody to move out, after receiving an undervalued payment because the appraiser was chosen by the investors
    - ** We need to research this, because the legislature may be evaluating overturning this statute to protect individual condo owners.

  20. ** Will moving to self-management improve our community?
    - ** A member who has experience working with hundreds of HOAs suggested that we would be much better off if we could hire our own managers, even if we used an HOA management firm to assist with some specific tasks

  21. More Articles about Coop to Condo Conversion:

PREVIOUS EMAIL GROUP DISCUSSIONS (login required, can request access at

  1. Long original discussion and first FAQ about Hud payoff (includes valuations):

  2. Our original founders were coop organizers from Washington DC

  3. Original 40-year loans could not be prepaid, tying us into 40 years as a low-income property:

  4. Errant limited equity schedule

(login required, but all docs are also attached within group threads above):

  1. Minutes of 2011 bylaws change, 10 year life of corporation after HUD loan:

  2. 2002 summary of CV manager attending two NAHC classes on conversion to condo or fair market value

** items marked with a double askerisk above were added from the discussion