NATIONAL – Court rulings in unpaid HOA fees raise risk in RMBS, SFR deals

HOUSINGWIRE.COM:  Court rulings in unpaid HOA fees raise risk in RMBS, SFR deals
Moody’s: Newer deals have provisions to mitigate risk
By Trey Garrison
November 24, 2014
A new report from Moody’s Investors Service spotlights how recent rulings by the highest courts in Nevada and Washington, D.C. on unpaid HOA fees raise risk in residential mortgage-backed securities and single-family rental securitizations.Moody’s analysts say that a lien foreclosure by a homeowners association for unpaid fees may extinguish the lien of a mortgage lender are credit negative for RMBS and SFR deals.

“The rulings increase the risk of losses on loans secured by homes whose owners fail to pay HOA or condominium fees and the association then files a lien that it later forecloses on,” Moody’s analysts say. “Although the population of Nevada and Washington D.C. loans is a very small proportion of the overall RMBS universe, the risk could extend to properties in other states if more courts or legislatures adopt this legal interpretation.”  Read more:

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