Friday, September 28, 2012

New FHA rules loosen association requirements -

New FHA rules loosen association requirements -
Perhaps the most significant change is a liberalized policy on delinquencies: No more than 15 percent of the total units can be more than 60 days past due on assessment payments, not including fees and fines. The previous threshold was 30 days past due."The delinquency rate was the biggest hurdle holding back many associations from qualifying for approval," said Anderson. "Thirty days is not a lot of time. When market conditions are good, people usually pay their assessments on time. But in this economy, it's a fact of life that people are paying later and later....Another major change permits greater investor ownership. In existing associations or nongut rehabilitation conversions, an investor may own up to 50 percent of the total units if at least 50 percent of the total units have been sold or are under contract. Unoccupied and unsold units owned by a developer are not counted as investor owned unless the units are currently rented or were previously occupied.Previously, no single entity could own more than 10 percent of the units or one unit, whichever was greater."
Pamela McKuen writes about the increased leniency from FHA. They have swung from ridiculously lax pre-2008 to insanely restrictive, and now they are easing back again. And they are facing some unpleasant facts: high delinquency rates are the new normal, and investors are a huge percentage of the market for condos. Owner-occupants are not so easy to find in some situations.


Anonymous Homeowner said...

"high delinquency rates are the new normal"

What percentage of delinquencies are homeowners actually paying their assessments on time, but having their payments diverted to pay disputed fines and fees under the "priority of payment" scam account system?

If the FHA was seriously concerned about delinquency rates, it would stop subsidizing HOAs that uses this sleazy accounting method so common among CAI members.

This accounting practice artificially inflates the rates of so-called delinquencies in associations, for the benefit of the CAI attorneys and CAI property managers, to the detriment of the homeowners.

Anonymous said...

The sleazy accounting isn't just common - it is a fundamental policy of the CAI trade group.

In the presence of multiple "debts", Federal law such as the Fair Debt Collection Practices Act prohibits applying payments contrary to the consumer's instructions.

The purpose of "fines" is to create a multiple debt situation - one for "fines" and another for "assessments". CAI members frequently have contracts providing that THEY should get paid a "late fee" whenever the homeowner is in arrears on assessments or any other amount allegedly owed to their client HOA corporation.

The management company or attorney will apply the assessment payments to their own trumped up junk fees to leave the homeowner "in arrears" on assessments. This generates even more junk fees for the benefit of the HOA attorney and management company. In addition, the management company and HOA attorney now deprive the homeowner of the ability to vote AND can threaten foreclosure in order to extort their junk fees from the hapless homeowner.

The FDCPA prohibits this practice. CAI and its members naturally oppose the application of the FDCPA to HOA management companies. They claim the FDCPA was designed to guard against unscrupulous debt collectors. What they don't tell you is that they ARE the unscrupulous debt collectors. CAI doesn't really tell you why they oppose the FDCPA but now you know - the FDCPA prohibits and provides penalties for HOA vendors that engage in this unscrupulous practice.

You will find CAI's opposition to the FDCPA set forth in their Public Policies. (pg 32 of the September 2012 version - they used to list all the jurisdictions where their practices were unlawful. Reading the current version, one would not realize that these practices are unlawful across wide swaths of the U.S. wonder why CAI decided to no longer identify all the jurisdictions where their priority of payment scam is unlawful?)

Note Public Policy