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Federal district court bars foreclosure sale of first lien HUD-insured mortgages

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Mortgage Professional America | 02 Dec 2014, 09:01 AM Agree 0
The court held that a HOA foreclosure sale is not valid against HUD-insured mortgages, but will the ruling be extended to GSE-insured mortgages?
  • Glen Weinberg: www.fairviewlending.com | | 02 Dec 2014, 09:56 AM Agree 0
    Very interesting ruling, this will definitely be precedent setting in multiple states giving HOAs less leverage on recouping unpaid dues.
  • Wm Matz | | 02 Dec 2014, 04:58 PM Agree 0
    Actually, the effect is limited to states that give HOA fees a superpriority. Not sure how many do that, but it seems rare. CA does not.
  • PRO HOA | | 04 Dec 2014, 10:07 AM Agree 0
    The agencies who insured these properties need to realize that the lender, be it a bank or a government agency, DID NOT PROTECT THEIR INTEREST by failing to pay delinquent HOA dues. Why should the HOA suffer financial loss because the owner of the property, the lender, didn't pay dues?
    It's like the lender left their car running with the doors open and then were surprised when the car disappeared. The lenders were clearly asleep as to the existing laws regarding the HOA super priority lien. The Nevada Supreme Court unanimously upheld the law allowing for no further discussion. Ignorance of the law is no excuse.
    Re: the paranoia about mortgage rates skyrocketing and lending practices being negatively impacted because of this ruling is total crap. All the lender has to do is escrow HOA payments just as they do on property taxes and insurance. Problem solved.
    The lenders blew it and don't want to pay for their mistake.
  • mark | | 05 Dec 2014, 01:17 PM Agree 0
    The above comment is ignorant, in fact the HOAs have a guaranteed payment from the servicer of the federally insured mortgage. Unfortunately the HOAs work through collection agencies who try to forclose on these properties. HOAs could collect the payments under the servicing agreement with the GSA. This is a ridiculous situation driven by investors trying to get rich.
  • Wildcat | | 05 Dec 2014, 02:13 PM Agree 0
    Dear Mark,
    You obviously don't know what you are talking about. The only power HOA's have to collect unpaid Assessments is to file Liens and then Foreclosure. I was one of those collectors that tried every day to reach out to the banks for payment. They all thought they were above the law and ignored our requests as well as the Notice of Default and the Notice of Sale. I personally own 13 HOA foreclosures and it is I alone that has taken care of these properties for over 2 years. I also own homes that were not HOA foreclosures and the Owners are the ones who suffered because the banks didn't take care of their collateral and pay the monthly assessments.
    It is the Investors that are the Hero's of Nevada. We stepped up and took on all kinds of disasters with these home. All caused by people that never should have been allowed to purchase homes in the first place.
    Shame on the Banks for mortgageing the money to bad borrowers! Shame on Banks for not working with people that begged to keep their homes! Shame on Banks for not taking care of their collateral! Shame on Banks for not protecting FHA and Government backed mortgages! Shame on Banks for causing our home values to drop by not taking care of our neighboring properties that look like crap! AND Shame on Banks for thinking they can come take the collateral WE have been taking care of for 2 years.
    PRO HOA knows what they are taking about.
  • Their Problem- My Opportunity | | 25 Feb 2015, 07:13 PM Agree 0
    PRO HOA & WILDCAT I AM WITH U 100%- @MARK, OF COURSE INVESTORS ARE JUST TRYING TO GET RICH- I AM ONE OF THEM. IRONICALLY, MY MOTHER LOST TO A FORECLOSURE IN 2010 AND I HAVE NO EMPATHY FOR THE BANKS. THEY PREYED ON OUR DESIRES AND GAVE AWAY EASY MONEY. THEY MADE TRILLIONS. THEY GAVE NO ONE A WAY OUT AS THEY FORECLOSED ON EVERYTHING AND SOLD HOUSES BY THE THOUSANDS TO THESE SAME INVESTORS YOU ARE DEMONIZING- KEEP IN MIND ALL OF THE LOANS THE FORECLOSED ON WERE ON PROPERTY THAT WAS NOT WORTH THE LOAN GIVEN. FREE MONEY EQUALS INFLATED PRICES. THEY ABSOLUTELY ACTED AS THOUGH THEY WERE ABOVE THE LAW. TO HEAR THAT THEY ARE NOW PAYING FOR THEIR IGNORANCE OF A SYSTEM THEY THOUGHT THEY RULED MAKES ME FEEL GREAT. TO MAKE MONEY FROM IT MAKES ME FEEL EVEN BETTER. - THE RULING IN NEVADA IS VERY INSIGHTFUL, AND THE LAW THEY REFERENCE (UNIFORM COMMON INTEREST OWNERSHIP ACT) WAS WRITTEN WITH OFFICIAL COMMENTARY AS TO ASSIST IN LETTING READERS KNOW THE SPIRIT OF THE LAW.

    "As a practical matter, secured lenders will most likely pay the 6 [in Nevada, nine, see supra note ii months' assessments demanded by the association RATHER than having the association foreclose on the unit." Id. (emphasis added). If the superpriority piece of the HOA lien just established a payment priority, the reference to a first security holder paying off the superpriority piece of the lien to stave off foreclosure would make no sense."

    THE THREAT OF FORECLOSURE WAS WRITTEN INTO LAW TO FORCE PAYMENT TO THE HOA BC THE HOA IS ACTING LIKE A PSEUDO-GOVERNMENT AGENCY. THE THREAT WOULD BE NO GOOD IF IT COULD NOT BE ENFORCED. BANKS NEED TO START FOLLOWING LAWS RATHER THAN TRYING TO WRITE THEM.

    - PROPERTYPUSHERS.BIZ
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