Many organizations are feeling the impact of a stagnant housing market. Homeowners associations (HOAs) are no exception, but the pain they experience is also felt by mortgage servicers and investors.
National Mortgage News recently reported that more than 60 million Americans live in nearly 315,000 homeowners associations, condominium communities and residential cooperatives, but they rarely collect assessments on vacant homes. According to the latest survey by the Community Associations Institute, vacancies brought on by the economic slowdown are putting greater strains on the ability of owner and condominium associations to pay their bills.
When homeowners are strapped for money, HOA dues are typically last on the list for payments. After a bank takes over a home, it could take several months before they learn of an HOA account or claim exists on a property. With millions of properties out there that have HOAs attached to them, many of the associations and their management companies are unable to connect efficiently with the corresponding loan servicer to get claims paid.
It is necessary for HOAs and servicers to work together—through a middleman, if necessary—to bridge the communication gap. First lien positions are threatened by HOA claims in some states and that makes it far more difficult for properties to be sold until HOA claims are satisfied.
By connecting servicers and HOAs together, delinquent HOA claims can be satisfied, removing one vital step toward re-sell of a REO property.
The banks need to sell these properties to get them off the balance sheet in a satisfactory manner; the servicing industry needs a fast, cost-effective method to solve this problem. For this reason, providing a connection between HOA and servicer can help to not only unclog an overflow of foreclosure activity, but to help move forward a stagnant housing market in need of more home purchase activity.