dcsimg

Should Lenders Escrow Condo Dues and HOA Fees?

by Gina Pogol
August 2nd, 2010

Imagine that you own a condo and have to sell it. You get several interested buyers who will need to get financing from and FHA loan or a conventional mortgage. You accept an offer and happily proceed with the sale. And then the poop hits the fan. You can’t sell your condo because your neighbors blew off their condo dues!

Condo projects must meet certain guidelines before buyers can get FHA loans on them. And one of those requirements is that no more than 15% of the units can be delinquent on their HOA dues. Too many late-niks hurt you, your other neighbors, who will see their property values fall when the condos can’t be easily financed or sold, and lenders, because HOAs can foreclose on homes to collect delinquent dues. This then forces the lenders to foreclose on the HOAs to recover their money, an expensive and time-consuming procedure when only a few dollars were initially involved.

So why don’t lenders require that condo dues be remitted with the house payment? They already do it with property taxes and hazard insurance. It protects them, the others in the development, and the homeowners themselves — there are plenty of tales of predatory HOAs using non-judicial foreclosure as a way to strong-arm properties away from elderly or desperate homeowners.

As long as Congress is looking at mortgage reform anyway, why not include something useful in there?

  •  | 
  •  | 
  •  | 

 

This entry was posted on Monday, August 2nd, 2010 at 4:50 pm and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

Leave a Reply

Are you a Mortgage Lender specializing in FHA Loans? Join our mortgage directory today! Homeowners click here to appy for FHA Loans