Hi Darrell -

A lawyer should've informed you on these financials beforehand, but presuming you are set in that field, I'll say this: HDFCs are a great idea, if you do the research needed to be in a financially healthy older one.

What Lew means by "something is wrong" is this: This building is probably run by people who know each other well, and have been forgiving the debts of shareholders far too long. They need to start collecting, or the building will start to enter debt.

UHAB is a nonprofit that works to support, create and preserve affordable cooperative housing, or HDFCs, in New York City. One of the aims we have is to educate shareholders in the perils of failing to collect or forgiving back rents owed. Becoming a board member yourself would allow you to institute nonpayment policies, but otherwise, the building should get help and support for collecting these rents.

It may not have helped with this sale, but if you are still open to HDFCs, please check out the sponsored and private listings on UHAB's website, and come to our new buyer seminars by visiting http://www.uhab.coop

If you are set on this building, encourage the board to reach out to UHAB and get some support through Member Services. They will need it. Unfortunately, you were seeking financing at a time when banks finally got tough about lending - and you're an unwitting victim of those iron-fist reactions. At UHAB we work with a small network of very coop-friendly lenders, but first and most importantly, make sure you're entering a financially safe building.

Maintenance fees in a coop pay: the owner's pro-rata share of :1.property taxes,2 debt service of the underlying mortgage,2. heat and hot water, and 4. property maintenance. These costs must be paid, whether or not individual share holders pay their mainentance. So, the answer to your general question is that the coop or its residents must make up the deficit. How that is done depends upon a decision by the coop board.
The most important question you raise is the last. Yes, there is considerable risk. It is abnormal to have a number of people in a facility who are not servicing their obligations and I advise you to walk away. Something is wrong.
Lew