BofA says they will not pay delinquent HOA dues in a shortsale
Has anyone faced this situation before? I am asking BofA to pay delinquent HOA dues of $9000 in a shortsale of a condominium, deficiency is approx $70,000. The buyer has said that he will not give a cash contribution and my seller is very sick and not working these days, so she is unable to contribute. The negotiator says that BofA will only pay the delinquent HOA dues if the property is in the state of FL or MA. She says that the state of MS would not qualify. If this unit ends up going to foreclosure, the bank I think would have to pay the delinquent dues regardless of where it is. I think I am being fed a story. Need some help.
Replies to This Discussion
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Permalink Reply by Jon Zolsky on
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Actually if the bank gets it through foreclosure, they will have to pay all debt OR here in Florida 1% of the outsanding balance on the loan, which usually is pennies. And it is their choice what to choose.
There were some changes in Chapter 718 in Florida in July, so it may not be absolutely accurate -
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Permalink Reply by Jeff Payne on
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Yes, BofA will pay delinquent HOA dues however my experience is in Florida. I have an approval right now in which they will pay $18,000 in past HOA dues. Every BofA condo short sale that we do has past HOA dues and they always pay them, sometimes they will only pay a portion of them, depending on the investor
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Permalink Reply by Pacita C Dimacali on
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Yes, my last BOA short sale was exactly like this. And it's in California.
The seller stopped making her HOA payments, and the HOA filed a lien against her condo. So she was socked with delinquent fees, fines and lawyer fees. And yes, BOA refused to pay. Luckily the buyer came up with the cash.
I also negotiated with the HOA association for reduction in fees. You may want to try that first. If the HOA agrees, then maybe the buyer will soften and contribute (so may the agents if they want this deal to materialize).
This was a lesson for me so that everytime I talk with someone about short sales, I make sure they know that they should keep up with the HOA, insurance, utilities. If they refuse, I gently remind them that their lender may also refuse and therefore the short sale may not be approved.
Good luck to you. -
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Jon, I believe that it is 1% of the balance or back dues for one year, whichever is smaller. That just changed because it was 6 months for condos until recently
Jon Zolsky said:Actually if the bank gets it through foreclosure, they will have to pay all debt OR here in Florida 1% of the outsanding balance on the loan, which usually is pennies. And it is their choice what to choose.
There were some changes in Chapter 718 in Florida in July, so it may not be absolutely accurate -
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I know about the condos. It was 6 months and now 12 months, but I am not sure there was a change with houses and HOA, which was 12 months of dues before July 2010
Jeff Payne said:Jon, I believe that it is 1% of the balance or back dues for one year, whichever is smaller. That just changed because it was 6 months for condos until recently
Jon Zolsky said:Actually if the bank gets it through foreclosure, they will have to pay all debt OR here in Florida 1% of the outsanding balance on the loan, which usually is pennies. And it is their choice what to choose.
There were some changes in Chapter 718 in Florida in July, so it may not be absolutely accurate -
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Permalink Reply by Joan Psarros, CDPE, CRS, SFR on
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I think it doesn't matter which state the property is in someone will have to pay the HOA dues. In most complexes you can't get gate codes or move in if there are fees owed. I could be wrong as I live in FL and used to live in MA and obviously it has to be done in both states.
The issue I have is what is BOA thinking they have just haulted all their foreclosures as they have been not doing them right and no one was reading the files. Just figured that one and now they are getting ridiculous on their shortsales. So, if they can't foreclose and they can't do a shortsale what as a servicing company that was bailed out by the US taxpayers doing?
Yes, my last shortsale fell apart today with them as they asked for everything and ther was no value for the asking. -
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Permalink Reply by Wendy Rulnick on
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I am in Florida, like Jeff. I, too, have had BOFA pay many past due HOA amounts. Not always though :)
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Permalink Reply by Janine Donelon on
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Pacita C Dimacali said:Yes, my last BOA short sale was exactly like this. And it's in California.
The seller stopped making her HOA payments, and the HOA filed a lien against her condo. So she was socked with delinquent fees, fines and lawyer fees. And yes, BOA refused to pay. Luckily the buyer came up with the cash.
I also negotiated with the HOA association for reduction in fees. You may want to try that first. If the HOA agrees, then maybe the buyer will soften and contribute (so may the agents if they want this deal to materialize).
This was a lesson for me so that everytime I talk with someone about short sales, I make sure they know that they should keep up with the HOA, insurance, utilities. If they refuse, I gently remind them that their lender may also refuse and therefore the short sale may not be approved.
Good luck to you. -
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My seller has tried to keep up her monthly dues. She has been paying down a $12,000 assessment (to $9,000) from 2006 resulting from Hurricane Katrina damages. I have explained this to BofA but it does not seem to make any difference. Yes, I always advise my clients to keep up with their HOA dues for a shortsale. Thanks for everyone's comments, I will keep trying to make this work
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Permalink Reply by Ned Turner on
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I still am of the opinion that if the numbers are better for a bank to short sale rather than foreclose (you might have to escalate to get to a person that understands this) seller paid closing costs, utilities and homeowners dues can be approved by the bank. Had a condo in Seattle with a GMAC first and B of A second and they both allowed $14,000 towards back dues and a special assessment. The important thing was knowing the numbers up front.
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Permalink Reply by Jennie Blackburn on
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When Homeowners have financial troubles, the last thing they fall behind on is the mortgage, but the first thing they stop paying is the Association dues. Because of this, many Condo & Homeowner Associations in Florida are squeezed for funds and have become aggressive in pursuing every penny. They now have legal representation, have been successful in litigating similar cases, and are not as likely to back off.
What bank negotiators don’t realize is that if the property goes into foreclosure, it could end up costing radically more than just the delinquent Condo fees.
1. Special Assessments:
Unlike delinquent maintenance fees, Special Assessments are not extinguished in a foreclosure because they are part of the property’s cost basis. In other words, the assessed amount becomes real estate -- part of the property. Example: Structural improvements or repairs not covered by association reserves. Delinquent maintenance fees are part of an Association’s receivables, but assessments are part of the real estate itself. As this assessment directly affects the tax valuation of the property, it cannot be separated from it. Which means when a bank forecloses and the property becomes an REO, the entire assessment must be paid, plus the back due monthly fees and the Association’s legal fees, penalties, and the bank’s legal fees.
2. HOA or COA:
One wrinkle to check for is whether the property is governed by a Homeowner’s Association or a Condo Association. Currently, in a Florida foreclosure, the bank would only have to pay 12 months* of Condo Association dues (or 1% of the original loan amount, whichever is lower) in order to deliver clear title to the next owner. However, litigation in Florida is less certain regarding unpaid back dues owed to HOAs after a lender forecloses.
3. Attorney Fees:
Another thing the bank negotiator may not be thinking of is that, even if they only have to pay 12 months of past due monthly Condo fees after a foreclosure…what about the legal fees owed to the Condo Association’s attorney? Judges are lawyers. You think lawyers look out for other lawyers?
The bottom line is that foreclosure will cost a bank more than just a few months of fees and it is in the lender’s best interest to negotiate these costs as part of a short sale, rather than dragging its feet until foreclosure.
*only 6 months prior to new legislation in 2010 -
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Permalink Reply by joe beauchamp on
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Getting BofA to pay HOA dues is hit and miss for me. It does happen, but other times, I can get a real jerk negotiator who strips everything. One of the fun vagaries of dealing with unprofessional sloppy people.
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