HOAs seek association fees from banks

Condominium and home owners associations desperate for money are experimenting with a tactic called “reverse foreclosure” to force banks to pay association fees.

The process works like this: When a borrower stops paying the mortgage, banks often delay taking the property into foreclosure. When banks delay, neither the former home owner nor the bank is paying association fees.

To remedy this, the association files its own foreclosure notice, taking over the title. The association can’t sell the property because of the bank’s lien on it. So the association goes to court, renounces the property and asks the judge to give the title back to the bank.

When the judge does so, the bank has to pay the fees. Experts say this technique is becoming very popular in parts of the country where there are a lot of foreclosed condos.

Source: Miami Herald, Rachael Lee Coleman (03/07/2010)

Condo Purchases Require Extra Steps

Homebuyers contemplating purchasing a condominium should review a long list of documents and other information to make sure that the property they are considering is a solid buy in this challenging market.

The following information is a the top of the must-consider list:

• Budget. Examine the current budget, a year-to-date statement of income and expenses, and a couple of previous years’ budgets to see how they’ve changed.
• Reserve study. Understand the plan for maintenance and how it will be paid for.
• Special assessments. Ask if there have been any and whether more are planned.
• Delinquencies. How many owners are behind in their payments? Many lenders say no more than 15 percent of owners can be in arrears or they won’t write mortgages in the complex.

Source: Chicago Tribune, Lew Sichelman (08/23/2009)