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I have what I think may be a different type of question for y'all.

My HOA is planning a $900k rehab of our townhouse property, 55 units. This is going to be an expensive project to replace our wood siding with fiber cement. We are looking at banks that might be willing to loan us money under the following scenario:

1) The loan would not be secured by HOA assets but by binding special assessment obligations of the HOA membership.

2) The loan would be with the HOA and not with the individual HOA members, so that homeowners would be protected from the bank putting a lien on their properties, although the HOA could do so for failure to pay the Special Assessment.

3) There should be no prepayment penalty. Some HOA members may elect to pay the full amount of their Special Assessment up front or at some point during the loan term. This would allow the HOA to prepay the balance of that HOA member's portion of the loan amount.

Right now we have one bank that is offering such a loan at an estimated rate of the US Treasury 7 year constant maturity rate plus 4% (currently 7.17%), but I wanted to turn to my Foolish friends to see if there was a better alternative.

Who notes the rate will not drop below 6.5% but has no ceiling...
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