Association Collections and Mortgage Foreclosures
By: Candice Gundel, Esq.
The financial relationship and inter-dependence between mortgage companies and community associations has always been significant, but the true extent of that relationship had not been explored until the real estate downturn and foreclosure crisis we have experienced over the last 6 years. Mortgage companies rely on community associations to provide housing, maintain neighborhoods, and provide services that increase property values. Community associations rely on mortgage companies to provide funding, support and encourage buyers in the community, and ensure owners are paying their financial obligations.
When a property owner stops paying their mortgage and their association assessments the industries that previously supported each other become adversaries, each trying to preserve their financial interest in the property. The association will pursue an owner with a claim of lien and the mortgage company will pursue that same owner with a mortgage foreclosure.
Although each association collections case and each mortgage foreclosure have their own set of unique facts which will dictate the course and pace of the lien and foreclosure there are also many similarities. To assist in understanding the basic collections procedure for an association claim of lien our office has drafted and attached a Collections Process flow chart for newly delinquent accounts. In many association collection cases a pending mortgage foreclosure will dictate how the association proceeds with collection. For that reason we have also drafted and attached a Mortgage Foreclosure Process flow chart which outlines the basic steps required in each mortgage foreclosure as well as common terms and abbreviations in foreclosures.
The back-log of mortgage foreclosures that once plagued the legal system has been steadily improving. Courts along with law firms such as ours have been working to push the old mortgage foreclosures cases to conclusion. Lenders who engaged in fraudulent and unethical activity have agreed to a settlement which provides much needed financial relief to hundreds of thousands of homeowners. Likewise law firms that participated in the fraudulent foreclosure activities have either been cleaned up or closed down. As these beginning signs of a real estate recovery became apparent more people enter the market as buyers.
Despite the improving real estate landscape, not all owners are the model of compliance and some will fail to remit payment of their assessments. Some may still be experiencing personal or financial hardship. Others are forgetful and yet others are spiteful. The good news is that while we wrestled with record delinquencies over the last 6 years the Legislature has worked to provide more tools to the association to assist with the collection of past due assessments. Business Law Group utilizes all of these tools to pursue the collection of assessments from owners and preserve the association’s rights in mortgage foreclosures.