The HOA Crisis | HousingWire: The reason for the assessments, the industry would discover, is that most of the foreclosures were on mortgages originated between 2005 and 2008. Stokes said most homes being built during that bubble came under an HOA or condo association. He looked at the numbers and estimates 60% of the national REO inventory has an HOA attached, based on the files he receives from clients. That number goes up in places like Nevada and Florida.
"One property," he says in bewilderment, referring to one in Las Vegas, "had six HOAs attached to it. It was part of an enormous development. It had two primary HOAs and four secondary ones."
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A tale of caveat emptor when the tax man is the HOA.
2 comments:
Also a tale of "maybe we should not lend on HOA property" any more.
The HOA industry and trade lobby group of attorneys and HOA managers have long been worried about ensuring a continued stream of gullible victims buying into HOAs and condos. They know that government subsidies are necessary and have lobbied for government financing and insurance. As CAI (a trade lobby group for HOA attorneys and HOA management companies) states in their Public Policies
Financing Availability for Community Association Units or Lots
CAI urges the promotion by federal lending-related agencies and the secondary market to promote the availability of adequate financing programs for community association housing. CAI supports the development of consistent national legal and underwriting standards for community associations, and reciprocal approval of community associations by federal agencies and the secondary mortgage market and urges federal lending-related agencies and the secondary market to promote the availability of financing for community association housing.
Hopefully Fannie Mae, Freddie Mac, Ginnie Mae, etc. will have second thoughts about allowing loans, purchasing loans, or insuring, HOA-burdened property. The governing authority for these federally chartered institutions, the Federal Housing Finance Authority, has already been imposing constraints on lending for condo purchases AND investing or purchasing loans secured by any property that has a "transfer fee" associated with it. Such fees are found only on HOA/condo property and typically are nothing but a windfall demanded by the HOA/condo management company from the seller for ZERO SERVICES.
Next time someone tells you HOAs preserve property values, make sure to tell them "Not for owners. Only for HOA management companies and attorneys. Even the federal government wants to back away from lending money to buyers for these places"
The CAI does not want the government to regulate HOAs, but does want the government (ie, the FHA) to subsidize them.
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