Case Study: GMAC Financing

CHALLENGE

After the real estate crash of 2008, GMAC Financing foreclosed on over $3 billion in development loans with builders and developers all over the U.S. GMAC was in the tough position of receiving communities with serious issues, such as homes in disrepair and homeowners associations also in bad shape. GMAC needed to assess thousands of communities to prepare them for valuation and resale.

Before a community could be resold to another builder or developer, GMAC first needed to assess the homeowners association, and answer these questions:

• What is the financial condition of the association? Is there money to pay the bills?
• Are owners paying their assessments? Are vendors being paid?
• Are there architectural guidelines? Are they being followed?  Are violations being enforced? Do the guidelines add or detract value from the community?
• Are the governing documents in place? Are they being enforced?
• If there are existing owners what, if any, concerns do they have?
• What amenities, if any, does the community have?

There was a lot of information GMAC needed before they could make an informed, responsible sale of each community. GMAC wanted a detailed report covering all of the potential areas of liability that they would need to disclose to a potential buyer. They also wanted to maximize the sale price of every community.

SOLUTION

For each community owned by GMAC, Community Development prepared a comprehensive report that included:

• A forensic accounting review
• A written assessment of the community and recommended action steps
• Transition and turnover protocol for the association to apply to future homeowners

We used our expertise to analyze every aspect of the homeowners associations and identify issues that existed prior to reselling the communities. In identifying these issues, we helped GMAC both rebuild the communities and reduce their liability.