GGM Mortgage Fact Sheet

The Facts about the Garden Grove Manor Mortgage!

• The 40-year HUD mortgage for GGM is scheduled to be paid off in October 2013. After 37 years of mortgage payments, there are only 34 monthly payments left!
• When the HUD mortgage is paid off, shareholders will have complete control over GGM. One option shareholders will have is to keep GGM as a housing cooperative. One housing cooperative in San Francisco paid off its 40-year HUD mortgage in 2003. Their current carrying charges are around $750 per month. Their 1-bedroom, 2-bedroom and 3-bedroom apartments sell for over $300,000! The carrying charges and sales prices are probably higher in San Francisco than Garden Grove Manor’s would be, but this gives you an idea of what can happen when the mortgage is paid off.
• Condo conversion is another option that shareholders will have when the mortgage is paid off, but only shareholders can make that decision. The Board of Directors cannot turn GGM into condos. Under the GGM bylaws, it takes a majority vote of all shareholders to have condo conversion. These are the facts.
• The only thing standing between shareholders and the mortgage payoff in 2013 is bad Board management. The Board cannot answer simple questions about how much they are spending and how much money is left after all their spending. This year the Board fired its longtime lawyer and hired new lawyers, Matthew D. Berke and Alan D. Ross, who specialize in HUD loans. Why? We asked, but they won’t tell us!
• In 2008, HUD threatened to foreclose on the mortgage because GGM ran out of money in our operating accounts. GGM lost thousands of dollars each month because HUD stopped giving us the monthly Section 8 payments and refused to correct the problem. But we had over $300,000 in the replacement reserve account due to our careful budgeting and that saved GGM from foreclosure, refinancing or being sold.
• Now GGM is losing Section 8 money again and is still in danger of foreclosure. Last week Board members told us that HUD still has not paid the Section 8 money it owes GGM for 2008, 2009 and 2010. When we asked Board members how much money GGM has left, they said they don’t know!
• The GGM mortgage payment is more than $12,000 per month. When the mortgage is paid off, that money can be used to improve shareholders’ units, the buildings, the grounds and all other GGM facilities.
• The power HUD has to sell GGM or raise the carrying charges will go away when the HUD mortgage goes away. In January 2010, HUD increased market carrying charges more than 30%! That increase violated California law. If the Board and management paid attention to the laws they are required to follow, they could have stopped HUD from imposing that enormous carrying charge increase.
• The HUD REAC inspections go away when the mortgage goes away. Every time there is a HUD REAC inspection, GGM spends thousands and thousands of dollars to prepare for the inspection. The REAC inspectors can be very picky and give GGM a long list of corrections that have to be made, which costs thousands and thousands of more dollars. In 2009, the Board of Directors and management spent more than $100,000 in labor and materials to prepare for a REAC inspection that never happened.
• The power HUD has to dictate how GGM spends money will go away when the HUD mortgage goes away. The GGM Board and its shareholders will decide what the budget priorities should be.
• Even when the HUD mortgage goes away, GGM can ask HUD to keep the Section 8 contract to provide monthly assistance payments for shareholders who qualify.

Will the Mortgage Be Paid Off on Time? The Choice Is Yours!

For the past year, we tried to get the facts and share them with you. The Board of Directors tried to stop the recall election and deceive you about the candidates running against them. Our truth is simple. We want to pay off the mortgage on time. Fix things when they break. Discuss our common interests together in open meetings. Make decisions with our neighbors about our community. Have employees that respect us and work with us. Let you and your family live in peace. If you agree:

 Vote YES to Recall the Board of Directors! Bring your ballot to the December 16 meeting.

 Vote for Nelson Cuervo, Milina Kasalian, Keith Campbell, Alicia Boatman, and Tom DePalma!