I missed this article and it's good to know.
According to a study by the Community Associations Institute in Alexandria, Va., more than 7 in 10 bank-owned houses and apartments are not making regular assessment payments to the government-like boards that operate the projects in which the properties are located.
The inability to collect dues is placing a big financial strain on associations and the people who still reside in the communities they operate. Associations rely on dues to fund such services as utilities, trash pickup, landscaping and road and building maintenance. Assessments also fund a wide variety of amenities including swimming pools and playgrounds.
And here's the tactic.
Enter the Association Law Group, a Miami Beach firm that has come up with a strategy associations can use against nonpaying lender-owners. The ploy, dubbed the Mortgage Terminator by partner Ben Solomon, won't solve all an association's money woes, but it will at least force a lender's hands after an association forecloses on an owner to collect unpaid assessments.
In too many cases, lenders are failing to foreclose on troubled assets, regardless of whether the owner is a troubled borrower or a secondary lien holder. In many cases, they are either waiting for the market to clear so they can sell the distressed assets at a better price, or they don't want to pay the dues and/or assessments required from owners.
Whatever the reason, lenders that drag their feet are leaving associations in the lurch. But with the Mortgage Terminator maneuver, says Association Law Group partner Solomon, associations can take the title to the property and then force the primary lien holder to initiate its own foreclosure proceeding or release its mortgage so the association can sell the unit to cover what it is owed.
However, it might not work in California according to Irvine Housing Blog.
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