Your new neighbor? A bank.
When association member homeowners go into foreclosure, they usually quit paying their fees first. Who picks up the tab? Yup. Other members. Then, if the homes slides into official foreclosure, it gets taken over by a lender. But the lender isn’t any better: most of them don’t pay fees, either.
The Community Associations Institutes (CAI) recently released a survey about the travails facing associations:
- 45% face “serious” problems because the housing downturn
- 9% face “severe” financial consequences due to the downturn
- 5% or more of all units are vacant at 25% of communities
- 65% of associations have at least 5% of members delinquent on fees – up from 19% in 2005
- 30% of associations have a delinquency rate of more than 10%
Here’s who else should get involved: the Federal Housing Authority, Fannie Mae and Freddie Mac. They have been tweaking lending rules for condos up, down and sideways, always keeping lenders off balance. The proportion of owner-occupied units, for example, has moved up and down, but is always subject to appeal.
Seeing the secondary lenders want to micromanage, why don’t they micromanage the banks to pay the dues for their mothballed units? Not doing so effectively forces other association members to pay taxes twice. If the banks don’t like it, we have a suggestion: pay for it out of your marketing budget. Consider it community relations – you know, being a good neighbor.
Image courtesy of Morguefile contributor jdurham.