Vendors Flood Market with HOA Super-Lien Services | News
"Laws that give homeowners association debts "super lien" priority over all other claims have been a long-standing threat to servicers. But it wasn't until a pair of recent court rulings came out in favor of HOAs that industry vendors started to look at their existing data and technology to develop products for servicers to manage these risks. There are super lien laws on the books in 21 states, plus Washington, D.C. Historically, they've rarely been invoked, but when they are, the results can be devastating for mortgage debt holders. In a Nevada case ruled on last year, the first-lien mortgage holder lost its claim to an $885,000 debt because of $6,000 in delinquent HOA dues. "That gave everybody the awareness that this is not something that they should take lightly," said Ann Song, vice president of REO management for LRES, an industry vendor that recently launched HOA lien services for originators, servicers and investors...Vendors that have flooded the market with super lien-related products include Black Knight Financial Services, CoreLogic and LRES, as well as a partnership that incorporates services from MMREM and Equifax. The vendors all say their services can identify properties subject to super-lien laws and check for active HOA liens. LRES and MMREM will also help servicers negotiate HOA lien disputes. (The two vendors are both REO management companies, while LRES also has an appraisal services unit.)"
Superlien statutes give HOA/condo association liens for unpaid assessments priority over the first mortgage, at least in some amount. They vary from state to state. The idea is to protect the association from having its entire lien wiped out when the bank forecloses on the first mortgage and there is nothing left over to pay the association for unpaid assessments prior to the foreclosure. The solvency of community associations hit the radar screen of policy makers since the crash of 2008. Foreclosures wrecked a lot of homeowners' lives and also left an enormous number of associations in terrible financial shape.