NATIONAL – Homeowner associations liens cause problems for buyers
REALTY BIZ NEWS: Homeowner associations liens cause problems for buyers
By Mike Wheatley
May 19, 2015
Home buyers may soon face more stringent underwriting standards and even higher interest rates when applying for a mortgage to purchase a home that falls within a homeowner association, the lending industry warns.
The threat comes from mortgage industry officials who are warning areas with state laws that give community associations “super-priority liens” on homes in which owners have failed to pay their assessments. Super-priority liens grants a homeowner association the right to initiate foreclosures as well as get the proceeds from the sale of the delinquent home ahead of the first-lien position, which is typically held by a mortgage lender. Twenty-two states, plus the District of Columbia, have authority for super liens, The Los Angeles Times reports. David Stevens, president of the Mortgage Bankers Association, warned that in states with super liens where lender and investor interests can be erased, buyers may start to face higher loan fees, more stringent downpayment requirements, as well as time-consuming reviews of the homeowner association’s finances. Some lenders also have said that they will reconsider whether to do business in communities that have super liens. Read more: