application was denied due to deferred maintenance. Upon validating the board’s decision and confirming that there were no safety or structural concerns, the lender resumed the mortgage approval process.
Best Practices to Mitigate Risk
As industry expectations continue to rise, boards can position their communities for greater financial stability and resilience against external risks.
1. Prioritize Structural and Safety-Related Projects – Addressing high-risk projects, such as roofs, waterproofing systems, or structural concrete, demonstrates responsible stewardship and mitigates the risk of insurance and loan eligibility concerns.
2. Maintain Adequate Reserve Funding and Keep Your Reserve Study Current – Proper funding reduces the risk of future deferred maintenance and signals financial preparedness. Associations should update their reserve studies at least every 3 years, or sooner if funding levels change significantly or if major projects are deferred or completed.
3. Leverage Your Reserve Study Partner for Clarity and Documentation – When questions arise, oftentimes, your provider can discuss insurance and mortgage-related concerns and provide documentation to assist with renewal and loan processing – keeping the community’s insurance renewals and real estate transactions on track.
Insurance and lending trends will continue to evolve, driving the industry toward a more resilient future. An increased focus on structural integrity and reserves supports a more proactive approach to addressing building deterioration when issues are minor, rather than waiting until they become more complex and more costly to address. Lastly, communities that take a disciplined approach to capital planning will be best positioned to maintain coverage at the most affordable rates, mitigate risks of loan eligibility, and support home values.
Todd Walters is the Great Lakes Regional Executive Director PE, PRA, RS at Reserve Advisors. Todd can be reached at
todd@reserveadvisors.com.
www.cai-illinois.org • 847.301.7505 | 23
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