…..The mortgage industry is virtually defenseless against foreclosures by community associations for unpaid
assessments. As Mortgage Banking Magazine mentioned in a 2012 article, HOA issues “may be the biggest
problem most mortgage bankers have never heard about.”…
that the average delinquent HOA obligation is approximately $7,500 and that 1 in 5 households are
associated with an HOA, the total HOA risk impact to the securitization world is in the tens of millions…..
……. 309,600: HOAs of all types as of 2010—represents approximately 3000 percent increase since 1970.
11.6 Million: HOA homes in U.S., 1990, with 29.6 million residents.
24.8 Million: HOA homes in U.S., 2010, with 62 million residents.
$30 – $35 Billion—Estimated annual operating revenues for HOAs in the U.S., 2011
$2 Trillion—Estimated real estate value of HOA homes in the U.S., representing approximately 15% of total
value of all U.S. real estate.
Source: CAI online.org….
…But HOA accounts have had no such oversight in the past, and this exclusion is coming back to hurt
servicers and investors….
…..When foreclosures picked up in 2007 and reached alarming levels that continue today, HOAs found
themselves in financial binds. Borrowers rarely continue to make HOA payments when going delinquent
on mortgages—the HOA is actually among the first to go unpaid when members find themselves in
financial distress. The amounts they owe are uncollectable by HOAs and their management companies,
but when foreclosing banks take ownership, those institutions are responsible for making the same
payments required of other owners in the HOAs.
“High delinquency rates place tremendous
pressure on associations to meet their
obligations to the homeowners who are paying
their fair share,” said CAI Chief Executive Officer
Thomas M. Skiba, CAE, in a press release. “When
some owners—including lenders that have
foreclosed on homes and now own them—don’t
pay their share, other homeowners often must
make up the difference in higher regular
assessments or special assessments….
….The HOA, often managed by resident/officers who lack the
expertise to find and contact the correct person within the foreclosing bank, has little ability to present
…… HOA claims and liens have
been surfacing at the last minute for years, causing delays and failures in sales and title transfers…..
result, financial institutions are daily running the risk of seeing their first mortgages eclipsed by HOA lien
…… A far better process of proactive management is needed to protect the industry from the
clear and present risks posed by HOA liens…..
….It seemed illogical for this now-vital data to be unavailable, but this was the case due to
the lack of tracking over the years on community associations….
…..Registration is available online at no cost to HOAs. The benefits they can gain are significant and lasting,
providing answers to the problems they face every day in the interests of serving their homeowners.
Where once the HOAs were almost helpless to do anything but hire attorneys to file liens, they now have
a viable, easy to use alternative to recover owed fees and perform their chartered functions…..
are struggling for survival in many cases, and will add expenses on to claims where the servicer is
known to make up for shortfalls on other unpaid accounts. Amounts for late charges and
attorney’s fees can be magnified, but servicers will pay them to discharge the debts, resulting in
read the complete article at https://www.equifax.com/assets/USCIS/the_hidden_threat_of_hoa_liens.pdf