The recent rise to prominence of the “super-lien” as the result of a home owner association (HOA) or condominium owner association (COA) has brought with it a host of challenges. In states where the “super-lien” is in play, an unpaid association fee and subsequent lien could, by state law, push that lien to the front of the line (even ahead of a first mortgage holder) in a foreclosure scenario.
The Real Issue Is Identifying The Lien
Although the curative element of an unreleased super-lien comes with its own hurdles, the real issue facing title companies, lenders or servicers is identifying and locating those liens in the first place. A Sperlonga white paper does an outstanding job explaining why businesses trained in locating and curing defects or clouds on title (including unpaid liens) are struggling to locate HOA or COA liens. The author notes that requirements by Fannie Mae and HUD for servicers to proactively monitor HOA delinquencies that could, potentially, do harm to a first mortgage holder’s position was quite a mandate for an industry without many resources in that area:
“With HOA information in short supply for servicers, however, this is far more easily mandated than it is accomplished. In addition to checking on loans seriously delinquent or in default, servicers are required to monitor delinquent HOA payments. They are further required to advance funds to cure HOA delinquent accounts in arrears 60 days or more on behalf of Fannie Mae and HUD. These directives were issued to an industry that has not maintained HOA records, has no streamlined process to find and contact HOAs, and generally is unaware when an HOA is even involved in loans serviced by them. As for being equipped to monitor HOA delinquencies, it is difficult to track that which cannot be seen.”
Hard To Track HOA And COA Documents
Unlike tax liens, which have been recorded and monitored by the mortgage industry for decades, documents indicating even the potential for an HOA or COA lien have not been sufficiently tracked. The white paper explains: “For a variety of reasons, the mortgage origination business has typically not tracked HOAs on the homes securing its mortgages. The Covenants, Conditions and Restriction (CC & Rs) are signed at loan closing or before, but keeping track of the HOAs or the CC&Rs themselves has never been deemed part of the originator’s task. Likewise, post-origination entities that establish longstanding contact with borrowers, most notably loan servicers, have never regarded HOA tracking as part of their job. This may seem counterintuitive, but with servicing rights changing hands frequently and securitizations resulting in loan ownership transfers, the CC&Rs have been lost in the shuffle.”
In short, identifying any HOA or COA lien—especially in a “super-lien” state—is not something just anyone can do. There is no national repository of HOA/COA liens. Accordingly, a servicer or settlement services business needs a little professional help when it comes to identifying, locating and curing these clouds.
Fortunately, reQuire is positioned to help. To learn more about how we ease your super-lien concerns, Contact reQuire today!
About the Author
Sara Turk is the office manager at reQuire’s Release Tracking Connecticut location as well as the Team Lead for the Title Curative Department. Sara transitioned into her current role in late 2014 after the acquisition of Final Trac by reQuire. Prior to her role in the release tracking/title industry, Sara had 5 years of experience in the banking and financial services industry where she held various roles including customer service, sales, operations, and management. During her career in banking, Sara was NMLS certified and was regularly recognized for achieving excellent sales and operational results for her store. Sara holds an Associate of Science in Legal Assistant/Paralegal Studies and a Bachelor of Science in Legal Studies from Post University.