Preparing for the Coop Board

You need to speak with your broker ASAP. Boards do NOT like misrepresentations, even if the error was an innocent oversight on your part.

So here's the issue, I've already made a mistake on the document. In a rush to fill out the first draft of it, I double counted a set of accounts raising the total cash on hand. The board then came back and approved our financials due to our fixed salary and DTI as well. And then I discover this cock up...

She says to let it lay and our attorney has agreed with her. The other complicating factor is the fact that our investments have lost roughly $14K in the past month so with every week that goes by I need to adjust the numbers.

We're being gifted the down payment and the financials were presented to the Board to weigh in and they approved them last night.

Now with this latest issue, while only a matter of $25K, I want to make sure we're not totally screwed as it was a stupid mistake.

To make this even more interesting, after we submitted the offer we found roughly $30K in savings bonds we had forgotten about in the safe deposit box.

Our total liquid number now is the same as before we found the bonds. If that helps...

"We're being gifted the down payment and the financials were presented to the Board to weigh in and they approved them last night." If the coop board has already approved the financials submitted, at this stage I would just leave things alone.

Thanks, that's our plan. In the scheme of a $700K net worth, will a board look at $25K as material?

I should note the Board approved the financials before the seller accepted the offer, we'll still have to go through the formal Board Package and Interview. If you confess to being an idiot will they show leniency?

It's not that the funds didn't exist, I just didn't realize what sort of account it was.

I just feel like a complete fool, this is what happens when my wife doesn't check my numbers!

I've never heard of a board approving *financials* only, before looking at the entire package.

And approving the financials of an applicant whose offer hasn't even been accepted yet!

This building sounds like a mess, quite frankly.

Well the seller evidently was quite conservative and didn't want to accept the offer if the Board wouldn't approve the person. Definitely out of order but not the worst concept in the world.

Re: In the scheme of a $700K net worth, will a board look at $25K as material?

only if you're hoping to live next door to NYCMatt

Who forgets about thirty thousand dollars?

~ particularly if you have to be gifted the down payment.

he just didn't check all of his safe deposit boxes. and that last one had 30k of bonds in it.

I don't know your building, and I don't know your board. But investments that have lost $14k overnight will likely gain $14k overnight. In other words, you have to take a snapshot of your assets at *some* point. It's a moving target, and as long as you're consistent, there's no problem.

I would suggest you take a deep breath and "check your work before handing in your exam". You've made two gaffes already, and that's not cool.

Finally, I think the "pre-qualification" you're speaking of is cursory; we submitted a REBNY snapshot with our contract offer to show we were the real deal. The co-op application package is *MUCH* more detailed and complicated, as is board review and approval. If all you completed was one document, either you're not talking about a traditional co-op board package (and instead you're talking about the REBNY snapshot), or Matt is right ---- the building is a mess.

I'm guessing it's the former.

Inhale, exhale, and get it right from now on.

As a Board member, we do not like to find mistakes like this. It makes us have to scrutinize every aspect of the financials. I suggest that when you present the official package that everything is properly documented and accurate.
I have never heard of this 'approving financials' only. Are you sure they were actually reviewed by the Board? Sounds more likely reviewed by the seller before they accepted your offer.

This whole situation is unique, so it is hard to respond. As a rule, your board package had best be accurate, complete and you should be able to speak to every paper and figure in it. As for retirement accounts, few boards give a hoot about how much you have in them in terms of your net worth--we ignore retirement accounts since you can't access them unless you have an emergency and we don't want anyone whose emergency plan is to raid their IRA. Retirement plans are good primarily for showing an applicant is a stable person with long-term financial plans and who conducts their financial affairs like a responsible adult. Beyond that, it is other assets that matter.

As for errors in a package, all I can say is I better not find any and I fully expect the applicant to alert the board to any mistakes in the documents and statements contained in the board package. When I find a mistake on my own, it makes me question the integrity of the entire package and casts the applicant in a negative light.

As for what is done, I suppose that's finished. But if there's more to come, get it together dude. The double counting, mis-categorizing, and omissions are big no-no's here.

Thanks Everyone. Clearly, there were a number of rookie mistakes. Sadly, I do Compliance for a living so all the more embarrassing.

When I talked about the "financial approvals" I'm repeating what was communicated from their broker to our broker. They initially went to ther lawyer, who is on the coop board and he evidently sent them to someone else on the oars. All they did was review the initial financial statement (not the full package) to et a gauge of whether it would pass muster.

Luckily this was just the offer, we are having our broker review our package closely prior to submission.

We're strong candidates, no gap in employment, fixed salaries which are high with bonus being a small component and our DTI is 27%. After the down payment we will have 2.8 years in liquid reserves.

Having gone through everything much more closely today, I can safely say that there are no more surprises. The Board won't see this one until we present the package but are there enough mitigating factors with which I can generally feel comfort that they won't throw us out (yes, I recognize every building is different but this is more directed to those friends here serving on boards.)

I bought a condo, not a coop and had to provide back-up of every single account I said I owned and they had to match to the financial statement I provided, down to the dollar. And that was just for a condo board that had a right of first refusal (that never gets exercised; more of a formality). Coops are much stricter and unless it is an unusual situation, I would imagine you will have to provide month-end or quarter-end financials to back up your numbers. Others correct me if I am wrong, but I would think this is typical for a co-op.

On a totally serious note, how did you not have enough money for the down payment (it had to be gifted to you) but didn't know about $30k in a savings bonds you had? How did you not know your money is in an IRA vs a cash/money market/mutual fund account. Not being critical, I just don't understand how somebody could not understand their own financial picture enough to know that.

One other thing - you better hope none of the board members read streeteasy. Your situation is unique enough that if any of the board members read this thread, they will find out the hard way. I've never been on a coop board, but I would imagine if the board found out through reading this site, they would dis-approve you.

And fwiw, 27% DTI ratio is not strong by many coop standards. We require no more than 25% and prefer it be less.

Sounds to me like the OP may be a younger person whose parents or grandparents probably initially set up the accounts? I did not come from a wealthy family, but my parents and grandparents scrimped and saved and had a few accounts in my name. I didn't really take over control of my finances until I was 23 and bought my first property. I knew about "my" money, but I didn't know about what money they had for me -- vaguely knew there were some savings bonds and a brokerage account, but that was all. The equivalent of a REBNY form was the first time I had ever attempted to gather my financial information all in the same place, and I flubbed it badly. (Fortunately, under-estimating.) Didn't mean I wasn't prepared to be a homeowner. I fixed up the property and sold it for a hefty profit.

My other question is whether this co-op is a smaller building. In my very small building, we do an informal "pre-approval" based on the REBNY form. (Also do the same thing for pets.) The seller gives the facts to the board. The board gives the seller an unofficial, unwritten opinion about whether the potential buyer is a good candidate.

I would not hold any of these mistakes against you, nor would I hold it against you that you're posting on Streeteasy. You seem well-meaning, and I don't think being a math whiz is a pre-req for living in a NYC co-op. That said, others may be right that some boards would hold it against you, so I'd be careful about what else you write. Good luck.

hopefully, you are working with an experienced broker who will review your actual documentation and make sure that the financial statement, which actually goes to the board is correct with approriate backups (including copies of savings bonds) It sounds like someone on the board reviewed the rebny form as a favor to the seller. The real review is by the entire board with documentation Good Luck