How can the risks of tenancy in common group loans be managed?
Obviously, a shared loan arrangement creates the risk that a co-owner who has paid his/her share could nevertheless face foreclosure because another co-owner failed to pay. Tenant in common groups typically manage this risk by (i) undertaking a complete investigation into the background and qualification of potential co-owners before allowing them to join the group, (ii) requiring a similar evaluation each time a tenancy in common ownership interest is resold, (iii) making sure all payments on the shared loans are made form the group bank account (rather than directly from each owner to the lender), (iv) keeping reserve funds which can be used to make payments while a non-paying owner is sold out of the group, and (v) creating a powerful and efficient internal enforcement and foreclosure system. Practically speaking, although more than 5,000 of these groups have been formed, co-owner default is extremely rare, and there has been no instance of which I am aware of mortgage foreclosure o
