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2015 Board Member Forum is tomorrow!

Reminder. The 2015 Board Member Forum is tomorrow! Hope to see you there!

FHFA Works Against Community Asssociations

Reprinted from 

FHFA Takes Sides in War Between Lenders & Community Associations Over Priority Liens

by Andrea Drennen

lender-association-war

For those of you who were busy enjoying the holidays around the end of December, you may have missed a little bit of news that came out of CAI on December 23rd regarding a public statement made by the Federal Housing Finance Agency (FHFA), which stated that super-priority liens from Homeowners Associations violated the right of Fannie Mae and Freddie Mac to have first position, and increased the risk of loss to taxpayers:

 

One of the bedrock principles in this process is that the mortgages supported by Fannie Mae and Freddie Mac must remain in first-lien position, meaning that they have first priority in receiving the proceeds from selling a house in foreclosure.  As a result, any lien from a loan added after origination should not be able to jump in line ahead of a Fannie Mae or Freddie Mac mortgage to collect the proceeds of the sale of a foreclosed property."
 - Federal Housing Finance Agency on Certain Super Priority Liens

While the "increased risk of loss to taxpayers" is an easy button for the FHFA to push, it ignores the reality that the lenders whose loans they guaranteed are the ones responsible, not the HOAs.

Essentially, the FHFA is suing to strike down the first priority status of HOAs in priority lein states to ensure that Fannie Mae and Freddie Mac get paid by the lending institutions that failed to complete foreclosures in a timely manner, or pay HOA dues while foreclosure procedures were underway (both circumstances that would have avoided any lawsuits in the first place). 

 

Make no mistake, FHFA is bailing out mortgage servicers that lacked the competency to meet basic contractual requirements and follow established rules of civil procedure," said Thomas M. Skiba, CAE, chief executive officer of Community Associations Institute (CAI). "By suing community associations, FHFA is trying to protect Fannie and Freddie at the expense of association homeowners. That's unfair, unconscionable and unacceptable."
 - CAI: FHFA Move Threatens Associations & Owners

Priority lien laws for community associations are currently active in 22 states and the District of Columbia. Many of these state laws share common language, having been adapted from the Uniform Common Interest Ownership Act of 19821994 or 2008. According to their website, the purpose of the Uniform Law Commission, who drafted this law, is to provide states with "non-partisan, well conceived, and well drafted legislation that brings clarity and stability to critical areas of state statuatory law." In spite of these laws having been in place for more than 10 years in some cases, they are frequently challenged in court, especially after the recent mortgage crisis.

One abandoned home in a community represents a serious financial commitment by the other homeowners in the HOA. HOAs simply cannot afford to wait until lenders get their act together.

Following the mortgage crisis, many lenders have been particularly slow to foreclose on homes, in part because banks are incentivized not to foreclose (warning, that link may not be safe for work), and in part because the loan packages were broken up and sold in fractions, a practice that many believe contributed to the bursting of the housing bubble, and most certainly prevented lenders from being able to wholly collect on debts, and in some cases to even identify which debts were owed to them. This delay caused a number of delinquent homeowners to simply walk away from their homes, rather than waiting for the bank to do something.

Unfortunately for homes in community associations, delays in the foreclosure process do not prevent the home from accumulating costs. The primary function of the Homeowners Association is to preserve the value of the homes in the community. Allowing the home to fall into disrepair breaks the contract for the entire neighborhood. Many HOAs have gone so far as performing regular preventive maintenance on the abandoned homes (such as mowing lawns, cleaning gutters and power washing). Compound that by the lost income of the regular assessments used to maintain common areas in the association, a cost which must be made up by the other members of the association.

In other words, one abandoned home in a community represents a serious financial commitment by the other homeowners in the HOA. HOAs simply cannot afford to wait until lenders get their act together.  

Enter the super-priority lien, an option that allows community associations in these states an opportunity to recover these vital costs, even over the primary lender. But the FHFA disagrees, and this is why the president of CAI is steaming mad:

 

In one case, Fannie Mae’s servicers failed to respond to legal service of process and, despite mandatory notification pursuant to Nevada law, failed to appear at a foreclosure auction to protect Fannie Mae's financial interests," Skiba continued. "It says a lot about FHFA priorities that the agency now is suing to recoup Fannie Mae's losses from the pockets of community association homeowners, rather than suing servicers for breach of contract. Someone must stand up for homeowners and that’s what CAI will continue to do."
 - CAI: FHFA Move Threatens Associations & Owners

While we can expect to see lawsuits on this issue for several years to come, one state to watch is Nevada, where a recent decision by the Nevada Supreme Court seems to be in agreement that it is the lenders who are at fault here, not the HOAs. In a opinion filed September 18, 2014, the court had this to say:

 

U.S. Bank's final objection is that it makes little sense and is unfair to allow a relatively nominal lien—nine months of HOA dues—to extinguish a first deed of trust securing hundreds of thousands of dollars of debt. But as a junior lienholder, U.S. Bank could have paid off the SHHOA lien to avert loss of its security; it also could have established an escrow for SHHOA assessments to avoid having to use its own funds to pay delinquent dues. 1982 UCIOA § 3-116 cmt. 1; 1994 & 2008 UCIOA § 3-116 cmt. 2. The inequity U.S. Bank decries is thus of its own making and not a reason to give NRS 116.3116(2) a singular reading at odds with its text and the interpretation given it by the authors and editors of the UCIOA."
 - Nevada Supreme Court, SFR Invs. Pool 1, LLC v. U.S. Bank, N.A.

It's easy to see why the bank in this case felt that the issue 'made little sense'. After all, their loan amount was for $880,000 whereas the HOA's lost fees amounted to less than $10,000. However, as the justices stated, all legal process was followed by the HOA and the bank had been notified on several occasions. Plenty of opportunity was given to the bank to protect their investment and they did not avail themselves of it. Therefore, according to the Nevada supreme court, the problem was of the bank's own making, and no fault of the HOA.

Now that they are losing money, lenders are taking action, the FHFA is right with them. The battle lines are drawn and the vultures are circling. Hopefully, this battle will have a peaceful resolution, where everyone gets what they are due. Until then, we will continue to have hope that lenders will simply do what they should have done from the beginning, and faith that the courts have everyone's best interests at heart.


C&S Wins Readers Choice Award

A very sincere thank you to our clients for voting C&S the 2015 Readers Choice Platinum Winner in the management category.

2015 Board Member Forum - Reserve Your Seat

The 2015 Board Member Forum will be here shortly at the beautiful Manatee Performing Arts Center. In addition to the morning and afternoon sessions of information and education, breakfast and lunch from Pier 22 Restaurant is also provided. During the breaks, thirty service providers, specializing in community associations, will have tables set up throughout the lobbies, to answer your questions about their services. If you are an HOA or condo board member, or may become a board member in the future, you will want to attend and earn your State required Board Certification. The event is February 19th and it is provided at no charge, just contact us and reserve your seats. We hope to see you there!

CAI Urges Congress to Extend TRIA Program

News from CAI...

The 113th Congress had adjourned without extending the Terrorism Risk Insurance Act (TRIA). Legal authority for the TRIA program expired on December 31, 2014 and Congress has just reconvened January 6, 2015.

"CAI will continue to monitor developments on Capitol Hill and at the White House to ensure the 114th Congress takes up an extension of the TRIA program as a first order of business," said Dawn M. Bauman, CAI's Senior Vice President for Government Affairs. "Community associations carrying terrorism insurance coverage should consult their insurance agent to determine if their policy is impacted by Congress' failure to act."

The TRIA program was established in the wake of the terrorist attacks of September 11, 2001, as insurance carriers withdrew from the terrorism insurance market. The TRIA program is a federal government backstop against terrorism-related property and casualty losses. The program has stabilized the market for terrorism insurance coverage, lowering premiums and increasing coverage availability.

CAI's Bauman said, "As our country tragically knows too well, acts of terrorism are a real and devastating threat. The TRIA program is a proven and effective way for community associations to insure against acts of terror. Our communities require certainty in the terrorism insurance marketplace and TRIA should be extended without further delay."

A 2013 federal government study demonstrated the effectiveness of the TRIA program, noting a consistent decline in terrorism insurance premiums and increased coverage capacity since 2003. Through the TRIA program, the federal government acts as a reinsurer, allowing private insurance companies to determine maximum losses in the event of a certified act of terrorism against the homeland.

CAI Government Affairs represents the interests of the 65 million people living and working in America's community associations on legislative and regulatory issues at the local, state, and federal level of government.  For more information about the Community Associations Institute go to: www.caionline.org

 

 

Happy New Year 2015!!

Happy Holidays!

C&S Board Member Forum Coming Soon

Holiday Schedule for 2015 and Balance of 2014

2015 Holiday Schedule

 

Date

Holiday

Day of Week

Days Closed

Jan. 1

New Year's Day

Thursday

1 day

Jan. 19

Martin Luther King Jr. Day

Monday

1 day

Feb. 16

Presidents' Day

Monday

1 day

May 25

Memorial Day

Monday 

1 day 

July 3

Independence Day

Friday

1 day

Sept. 7

Labor Day

Monday

1 day

Nov. 11

Veterans' Day

Wednesday

1 day

Nov. 26

Thanksgiving Day 

Thursday

1 day

Nov. 27

Thanksgiving Friday

Friday

1 day

Dec. 24

Christmas Eve

Thursday

1 day

Dec. 25

Christmas Day

Friday

1 day

 

2014 Holiday Schedule Remaining

 

Date

Holiday

Day of Week

Days Closed

 Nov. 27

Thanksgiving Day 

Thursday

 1 day

 Nov. 28

Thanksgiving Friday 

Friday

 1 day

 Dec. 24

Christmas Eve

Wednesday

 1 day

 Dec. 25

Christmas Day

Thursday

 1 day

 

 

 

 

 

Happy Thanksgiving!

Thank You to Those Who Served

Please Vote in the Readers Choice Awards

Voting ends November 30th. If you have not already voted for C&S in the Readers Choice Awards, there is still time. Just click here and then click on C&S Management from the list.  Please vote today and thank you for all your support!

 

 

C&S Sponsorship Has Grown to 16 Book Buddies

Thirteen C&S team members now support the Literacy Buddy Project of the Early Learning Coalition of Sarasota County and are providing books to 16 book buddies. Below are pictures of some of the C&S team getting the books ready to be sent off to their Literacy Buddies. The purpose of the Literacy Buddy Project is to teach children about correspondence, communication, and promote early literacy while providing children with quality books that they take home. The project also supports parents as partners in their children’s learning. For many of the children, a Literacy Buddy provides the only opportunity for them to have books of their own at home.

Anyone, any age, anywhere can become a Literacy Buddy and it doesn’t take much time, but makes a large impact in the life of a child. Exchanges occur three times per year. For more information about the Literacy Buddy Project and the Early Learning Coalition of Sarasota County, look at their website: http://www.earlylearningcoalitionsarasota.org

C&S Sponsors November Board Certification Class

New board certificatican flyer 11 18 14

Watch Out For Fires & Flames

Most in-home fires are caused by ordinary things like a stove burner, candle, space heater or extension cord. Mental lapses, poor judgment and carelessness make these things dangerous.

Thankfully, by exercising good safety habits and taking simple prevention steps, you can cut down on deadly and damaging fire risks.

First, always be sure your smoke alarms are working. Test them monthly and replace those that are more than 10 years old.

Cooktops. Never leave the kitchen while something is cooking on the stove. Keep combustibles, such as curtains and wall hangings, at least three feet from the stove.

Space heaters. Keep them at least three feet away from drapes and bedding, and plug them directly into outlets, not extension cords. Don’t use space heaters while sleeping.

Wood stoves and fireplaces. Empty ashes in a metal container and store them outside away from combustibles for at least a week before disposing of them in the trash. Be sure your chimney is inspected and cleaned annually. Keep any combustibles at least five feet away from the stove or fireplace.

Electrical equipment. Replace undersized or frayed extension cords. Never run an extension cord under a rug. Call an electrician if circuit breakers regularly trip or if your electrical box has a warm cover. Don’t use light bulbs that exceed a fixture’s recommended maximum wattage.

Appliances. Ensure combustion chamber covers are in place on water heaters. Clean all lint from a dryer’s back service panel and from the vent line. Replace vinyl vent lines with smooth, metal ducts.

Smoking. Don’t smoke in bed. Use large ashtrays on tables. Soak ashtrays under the faucet before throwing cigarette butts in the trash.

Candles. Use tip-proof containers. Burn candles only while you’re awake and in the same room. Keep candles at least three feet away from combustibles.

Matches and lighters. Store out of the reach of children.

Additional Hurricane Safety Tips

windy-day 1

Since we are still in hurricane season, we thought it would be good to provide some additional safety tips.  During extreme weather events, mobile devices can be essential tools for keeping in touch with family and monitoring response and recovery efforts. Before a severe storm hits, make sure your mobile device is prepared.

Start a texting tree:

When communication channels are disrupted, texting may be the only available way to stay connected. Create a network of contacts on your smartphone so you can quickly reach out to others in your community.

Set up Wireless Emergency Alerts (WEA):

WEA are emergency text messages sent through your wireless carrier by government authorities, including local and state public safety agencies, FEMA, the FCC, the Department of Homeland Security and the National Weather Service. The alerts can help you stay informed when you may not have access to television or radio and can help keep you safe during a crisis. Messages include extreme weather warnings, local emergencies requiring evacuation or immediate action, AMBER Alerts and presidential alerts during a national emergency. For information about which mobile devices are WEA-capable and carrier participation, visit www.ctia.org/wea or contact your wireless carrier.

Use mobile banking and insurance apps:

Banking and insurance apps allow you to move money, pay bills, deposit checks and file claims from your smartphone.

Prepare for power outages:

If you have advanced warning of a severe weather event, make sure to fully charge your phone. Keep a car phone charger and spare battery on hand as well; if power is out for an extended period, your car can serve as a valuable energy source.

 

HOA/Condo Board Certification Class

Ellen Brown will be one of the presenters at the upcoming Board Member Certiification class for HOA and condominium board members on November 11th in the Meadows.  

CAI Ad for Meadows Newsletter 5x8

Happy Labor Day 2014!

Congratulations Colleen Lloyd - CAM

 

colleenCongratulations Colleen Lloyd for passing the State test today and becoming a licensed CAM (Community Association Manager)!  

C&S has been urging Colleen to take her test for some time as she has acquired more experience and knowledge than many long term CAMs in her role as an administrative assistant with C&S.  

We are very proud of Colleen and know that her future client associations will be in very good hands.  

 

Congratulations Ellen Brown, PCAM

Brown.Ellen

Congratulations to Ellen Brown, our latest to be awarded the Professional Community Association Manager (PCAM) designation by the Community Associations Institute (CAI).

PCAM is the highest designation a community association manager can be awarded and requires an extensive range of education, experience, professional involvement, and specialized classes ending with a comprehensive case study.  The PCAM program takes at least five years to complete all requirements.  

Ellen is a District Manager with C&S and will be attending the formal PCAM awards presentation in Las Vegas.  Ellen, we are very proud of you!

Click here for more information on the PCAM designation.