Florida Condo Communities Hit by Crisis
A new survey of property owners in Florida's condominium, homeowner and other community associations shows rising mortgage foreclosures are causing revenue shortfalls that pose significant threats to operating and maintenance budgets and to the health and security of many communities.
This is according to the 2008 Florida Community Association Mortgage Foreclosure Survey, which was conducted online statewide from March 26-April 8 under the auspices of the Community Association Leadership Lobby.
The survey shows a direct correlation between rising mortgage foreclosures and corresponding decline in revenue from maintenance fees and other assessments in the state's condo and homeowner communities.
More than 60% of the nearly 500 survey respondents said that banks and mortgage lenders now holding title to the foreclosed units or homes are not meeting their legal obligation to pay regular fees or other assessments to the association. More than 40% reported mortgage-foreclosed units or homes in their communities have been vacant for more than six months, with one in five citing vacancies of more than one year. Respondents expressed concern about maintenance and security issues related to vacant units as the 2008 tropical storm season approaches.
Community Association Leadership Lobby co-executive directors David Muller and Yeline Goin, attorneys with the law firm Becker & Poliakoff, which established CALL in 2003, said the survey results are a sober reminder that individual mortgage foreclosures are having a negative ripple effect that can undermine the property values and available services in entire communities, particularly in Florida's common ownership residential condos, HOAs and other community associations.
"As a result of the mortgage foreclosure crisis, community associations statewide are now seeing the compounding effects of declining revenue collection and will likely have to balance association budgets through increased monthly fees and assessments for members, many of whom are already burdened with increased mortgage, insurance and property tax obligations," said Mr. Muller.
"As the 2008 storm season approaches, strains on many community association budgets from the downward-spiraling mortgage foreclosure crisis could leave many communities vulnerable and ill-prepared to cover storm damage costs and rising insurance rates in the coming months."
Ms. Goin said public policy makers need to take a hard look at the impact mortgage foreclosures are having in community associations, where the pain is being felt as much more than a crisis of declining real estate prices.
"The governor's HOPE task force and Florida state legislators need to address in particular the growing number of vacant mortgage-foreclosed units and homes and declining revenue collection that undermines the ability to maintain the health and general welfare of millions of Florida community association residents statewide."
Three-quarters of the 2008 Florida Community Association Mortgage Foreclosure Survey respondents were members of their association's board of directors, making them most likely within their communities to have knowledge of the current level of foreclosures and the impact on revenue collection and budgetary considerations in their community.
Key findings include more than half (58%) of survey respondents statewide reported a definite increase in the number of mortgage foreclosures in their associations, with a particularly sharp increase of 71% in mortgage foreclosures in homeowners associations and a 53% increase in foreclosures in condominium associations.
About one in four respondents (26%) say the mortgage foreclosure rate within their community over the past year had increased by at least 50%, with 13.5% reporting a jump of more than 100%.
A slight majority (51%) of survey respondents polled reported a decline in the collection of maintenance fees and other assessments as a result of mortgage foreclosures in their communities.
Almost 60% of respondents reported that mortgage lenders who have foreclosed on units or homes in community associations are not currently paying monthly maintenance fees and/or other assessments as required by law.
About four out of every 10 respondents (42%) reported units or homes left vacant for six months or more, and 20% - one in five - reporting that units or homes have been uninhabited for one year or more as a result of mortgage foreclosures. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/