HOA and Assessment Fee Problems

Many places like Florida and Arizona are having difficulties with Home Owner Associations. It seems that when people foreclose, they are not paying their assessment fees! These fees do not just go away. Someone has to pay. And as usual, the responsible people are the ones.

Foreclosures cause woes for property associations

STAFF REPORT
Published Friday, April 18, 2008 at 4:30 a.m.

Florida's growing foreclosure problems are wreaking havoc with the budgets of homeowner, condominium and community associations, according to a new survey by an industry trade group.

Two-thirds of associations polled by Community Association Leadership Lobby (CALL) said they would have to raise fees this year to compensate for the losses.

More than 60 percent of the nearly 500 associations surveyed said that banks and mortgage lenders holding title to foreclosed homes or units are not paying regular fees or other assessments.

and

Foreclosures force HOAs to cut corners on upkeep

Homeowners associations strapped by unpaid assessments related to the foreclosure-ridden real-estate market are mustering volunteer work crews, cutting maintenance jobs and scrimping on landscaping to save money.

Phoenix, Chandler and Avondale are among Valley cities fielding calls for help from HOAs that previously turned only to their own boards of directors and management companies.

"We are in new territory and need to find creative ways to work with everyone, whether that's stepping in with volunteerism or offering some training," said Annie Alvarado, deputy director of Phoenix Neighborhood Services.

Municipalities are trying to figure out what, if anything, they can do to help cash-strapped neighborhoods navigate the legal and financial difficulties that plague distressed properties.

Anyone that still thinks Chicago is different is delusional. The coveted Near North Zip Code of 60610 is an eye opener. Look at the building at 345 N. LaSalle. There are 15 condo units in pre-foreclosure, 1 going to auction in May, and 9 that are bank owned. 33 W Ontario Buildings has 11 in pre-foreclosure, 1 auction that has past, and 25 that are bank owned. I am sure that some of these assessments are getting paid, but the ones that are not are adding to burden of the stretched owners that are still surviving. Only time will tell. Expect some bleeding heart Chicago politician will try to pass a bill to make taxpayers front these people.

HELOCs go Bye Bye

It seems that home equity lines and lines of credit are disappearing. Here is what is being reported:

When HEL Freezes Over -- Who's out in the cold with the HELOC freeze?

Banks spent the last decade trying to persuade everyone who came through their doors to take out a home equity loan (HEL) or a line of credit (LOC). Now they've changed their minds. Sort of.

Financial institutions are still marketing these products, but they've also started freezing accounts of current customers.

Countrywide suspended 122,000 accounts.

USAA pulled or reduced 15,000.

Chase, National City, Washington Mutual and Suntrust have mailed out HELOC Freezes

And the pending freezes list includes Bank of America and CitiGroup.

I haven't read of any lenders calling the loans due. What they are doing is tightening their lending practices. Loans that were already approved and in place, with the home as collateral, are riskier now that home values have fallen almost everywhere.

Who´s in trouble? Anyone who has an outstanding HELOC, or is trying to get one, whose outstanding mortgage loans would then exceed 80% of their equity. Let´s look at an example. The Browns bought a $300,000 home. Between their down payment and the monthly payments they´ve made, their loan is now only $200,000. They took out a $50,000 Home Equity Line of Credit last year to provide some major maintenance to the structure.

and

Banks Closing Doors to Home Equity Loans

When bankers use such catchphrases as "liquidity crisis" and "tightened lending standards," what they really mean is that it's tougher to get a loan. That's certainly true for home-equity lending. Until recently, borrowing against soaring home values was almost as easy as getting a new credit card. Now, prospective borrowers find it more difficult to meet lenders' increasingly stringent requirements.

Big Trouble

The housing market is officially in BIG TROUBLE. The top tier law firms are scaling back hiring of new associates! Who will buy $600,000 2 bed condos now?!

Law Firms Curtail Associate Programs As Economy Slows

By ASHBY JONES
April 14, 2008; Page B1

For associates at law firms, how quickly things have changed.

This time last year, salaried lawyers at many of nation's largest firms had just scored a pay bump, as business was blazing and firms were scrambling to keep talent. Now, due largely to a slowdown in work relating to mortgages, real estate, mergers and private equity, some firms are taking such measures as rescinding offers to incoming associates and summer associates, asking first-year lawyers to start several months later and shortening their summer programs to save money.

I can hear Lincoln Pk and River North screaming right now.