According to The Sun Sentinel on 8/11/10, Home Owner Associations are fighting back more aggressively against foreclosures and are taking units back through a process called "reverse foreclosure".
Basically the association forecloses on the property and during the process petitions the court to assign a certificate of title to the bank.
This triggers the payment of past due fees of up to one years worth.
Another bill that came into effect on July 1, authorizes the bank to demand payment from the tenant.
Should they fail to pay, the tenant is evicted by the association.
If the owner is 90 days delinquent or more they will no longer have access to the common areas such as the gym, swimming pools and clubhouses.
This will also apply to their tenants.
Finally the HOAs are able to avoid being taken advantage of by delinquent owners, however, the HOAs seem to be the ones now abusing these new rights and spreading misinformation.
A legal firm, now specializing in this action on behalf of associations, is quoted as blaming the need for such legal strategy on the "flagrant stalling of lenders".
However, Alex Sanchez, president of the Florida Banker's Association is quoted as saying it's not the banks stalling that causes the delay, but the banks trying to work out agreements with sellers.
In my experience working out short sales, I find the most difficult parties to deal with are the Associations themselves.
We do not find the banks stalling just because they are condos, or because they will be liable for the monthly fees.
This argument does not stand to reason because if a bank has to take back a property they are limited to only 12 months worth of past dues, so stalling does not make any sense.
They can go ahead and list the property with an REO agent for a quick sale, thus limiting their holding time.
The Associations have no choice but to accept the 12 months of past dues, however, when it comes to short sales they want every cent owed, which most times is over 12 months by the time the bank has decided to deny a loan modification or accept a short sale offer.
On top of the back fees, the association attorneys add outrageous fees for their services once the association has turned it over to them.
At the moment I am trying to work on a short sale where the back dues have increased to $16,500.
The unit has mold and plumbing problems.
The bank knows if they foreclose they would only have to pay a fraction of this amount, yet they have been willing to pay up to $14,000.
The association, however, is unwilling to discount the amount not even by a dollar.
Many Realtor and buyers are not interested in listing or buying short sales that are in HOAs as a result, which leads to more bank owned properties, driving values down even further.
This is not the only example.
I have many cases where the association has just refused to discount the past dues in order to have a short sale go through, and have their "associated lawyers" adding hefty fees, and are using the new law to rent out the units.
The rents are going straight into their pockets and when we have obtained estoppel certificates they have not applied any of the rental payments towards the balance! Of course it's more media worthy to make the banks the bad guys and the associations the victims, but there seems to be much corruption, abuse of the system? unfair practices.
HOA practices need to be questioned, especially the association's relationships to the legal firms.