An Update on Condo Conversion Progress
The most common questions we get asked, both at Board meetings as well as in the hall are, "Where are we with condo conversion? When will we be done?!"
They are excellent questions, and ones that we as a Board have had top-of-mind for the entirety of our term. However, it has always been a struggle to find a response that feels wholly satisfactory given how urgently we all desire the conversion to complete. The fact of the matter is, this process has been and will likely continue to be fairly complicated and at times out of our control. In our last Board meeting, we were met with heartfelt pleas from shareholders reinforcing just how much they are depending on this conversion to go through. We were asked for some sort of commitment for a completion date. Many are understandably frustrated at the seeming lack of progress and some have shared those frustrations each month.
Every member of the Board, along with virtually all shareholders of the Royal Palms want to convert to condominium, and do so as quickly as possible. That point may seem trivial, though it is worth stressing. We are all working towards the same goal. However, it's understandable that shareholders aren't able to see this progress, perhaps in a way that we are able to see a leak being fixed, or paint on the building, or film on a window, and that can be frustrating.
To help provide what information we have, here are the answers to some common questions we receive. We hope this helps keep you up to date, along with reinforce that we are urgently pursuing conversion and are committed to do so as long as we are on the Board.
What progress has been made on conversion?
The first major breakthrough was in passing the CC&Rs. Without those, the entire conversion process was at a legal standstill. In fact, because it took several years to get these passed meant some work had to be redone even just to initiate the conversion process again.
Once we had overcome that hurdle our conversion consultant, Mr. Scarlatti, focused his time on identifying who had mortgages in the building and who the point of contact was at each lending institution. To get this information, you might remember having filled out a mortgage questionnaire. Getting everyone to fill this out was a time-consuming process, and Erin Copenbarger literally went door-to-door to get this accomplished!
As most existing mortgages are held by NCB, this was Mr. Scarlatti's first stop and the area for him to make the most progress. He's been navigating NCB as a primary lender in hopes that once conversion is approved at NCB, it provides a template to follow for the other lenders. Both Mr. Scarlatti and designated board members are in regular communication with NCB and working on approving "in-house" loans for conversion.
Additionally, Mr. Scarlatti is in contact with other lending institutions with varying degrees of engagement. The strategy has been to focus on NCB hoping that once they approve, it should make the approval process much easier. The process, as Mr. Scarlatti has called it, is like "herding cats in a rain storm."
Who are these other lenders?
There are a total of a dozen or so lenders that hold mortgages within the building, and all must approve the conversion. There is a mix of large banks, small banks, and even private lenders. To add to the complexity, some loans have been sold off to Fannie Mae/Freddie Mac which will require yet another approval. Mr. Scarlatti is in contact with all of them, and navigating through the bureaucracy that comes along with institutions of this nature.
Why is it taking so long?
If you have ever struggled finding the "right person" to talk to on a customer service phone call, you might have a hint of what this process was like starting off. In some cases of foreclosed units, we had no idea who even owned the property or where to start. Then, even if we found that information the loan might have been sold or we had another rabbit trail to follow just to find a contact that could point us in the right direction. And that would be for a single unit! In some cases of foreclosure and other distressed properties the mortgages have been sold and that makes the situation even more complex. And all of this transpired even before the talks with the banks could even begin.
So please understand, this is a very complex process. It will likely remain complex though it should simplify over time. Leading into the effort, Mr. Scarlatti was hesitant to give any sort of time estimates and it's easy to see why-- there is so much that is out of our control and in the hands of third parties, all of which have their own policies and procedures and processes for us to navigate.
Who is in control in this process?
While the Board are your elected representatives to help keep the process moving, unfortunately not much is in our direct control at this point. We push Mr. Scarlatti and David is in contact with him several times a week. Erin is in direct contact with NCB and aiding in the process, as Mr. Scarlatti has faced some challenges given he is not a shareholder himself but simply representing us. We will be working with banks more directly to assist with any specific issues as they arise to aid Mr. Scarlatti with any red tape that arises. Ultimately, this current phase (which is effectively the "conversion approval" phase) will be exclusively in the hands of the banks. Additionally, we have utilized Pam Moore's office to aid in title searches and will continue to leverage her resources where appropriate to further the process. We are very much pushing this along in every way we are able.
How can I help?
First and foremost, your patience, understanding and support are incredibly helpful. We welcome and encourage you to come to the Board meetings to get updates and even share your concerns. However, understand we are doing everything within our power to move this process along as quickly as possible.
Also, there will be an upcoming opportunity to do your part. On a lender-by-lender basis, once conversion is "approved" those who hold mortgages will be required to sign off on the loan modification to enable the conversion. By signing these agreements and urging your neighbors to do the same once they receive theirs will ensure that no further delays happen; at least none that are within our control.
We thank you all for your continued support!
- The Board of Directors