It’s a Nevada Supreme Court decision that didn’t resolve much.
The court’s September ruling in SFR Investments Pool 1 LLC v. U.S. Bank gave homeowner associations the right to wipe out entire mortgages through foreclosures for late dues. But it also launched a legislative effort to reverse the right to what’s called a super-priority lien.
Today, the battle continues between real estate agents, who say the rules put banks on the brink of a local lending boycott, and HOAs, who say the system is finally working the way it should.
Both sides have taken to courts and to Carson City to make the case for additional change. The results could have long-term implications for Southern Nevada’s housing market.
One thing the legal challenges and legislative changes have yet to accomplish is to seal the bitter division between the two sides.
Question of fairness
It’s “rank unfairness” to let an HOA with a claim of $3,000 or $4,000 in late dues and fees foreclose on a lender and wipe out a $300,000 first mortgage, said Keith Lynam, president of the Greater Las Vegas Association of Realtors.
Allowing super priority also undermines the local real estate market.
“Lenders have made it clear that extinguishment of noteholders needs to be addressed. If it’s not, it will be addressed for us,” Lynam said. “They have made it clear they will not lend here.”
Association managers counter that the real unfairness happens when banks let delinquent homes languish, HOA dues unpaid. Read more: