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sold my bay area condo since I have large premium that is unpaid. If next bubble or recession or whatever hits, I am sitting duck. Lose job and unable to make payment, double whammy. if I paid off, that is different matter. I am looking at cheaper 1-2br condo with cash payment so that at least I will not endup with loan payment if recession hits even after I lose job. The only concern is I could not quite afford house or at least close to a decent one, but when recession hits, when neighbouring owners starts to foreclosing how it will affect yours?
The biggest things I can think of is host of foreclosed owners unable to make HOA payments so condo in general will deteriorate due to lack of maintenance fund. But I am going to it is a temporary one and once economy comes back roaring back again, it will improve.
Does remaining owners pick up the increasing condo HOA fees if number of owners start foreclosing and start missing HOA payments? Does anyone have experience? Thanks!
Good for you. Get a nice big pile of cash out of the deal?
Rent on the cheap for a while.
WHEN that recession you fear strikes... buy.
Oh yeah... hold on to that pile of cash until then.
Yes, massive cash but outlook does not good: all the factors are pointing that the housing will only increase in coming years: 3rd rail law in cali, limited land, bureacratic paths to home building, unwillingness for the owners to sell.
Unless some tech bubble burst in a big way, it is going to rise. Now I am on the homeless side, definitely waiting for bubble to burst.
all the factors are pointing that the housing will only increase in coming years: 3rd rail law in cali, limited land, bureacratic paths to home building, unwillingness for the owners to sell.
...
Does remaining owners pick up the increasing condo HOA fees if number of owners start foreclosing and start missing HOA payments? Does anyone have experience? Thanks!
Prior to foreclosure, homeowners quit paying their HOA dues. They may not pay dues for several years. They often quit paying dues before they quit paying their mortgage. Eventually, the bank forecloses but this can take several years.
During the last recession, many bank owned properties sat empty for years. In order to sell, they would have had to lower the price and take a hit on what they had invested and which bank employee wants to do that? Not exactly a resume builder. Also, they may be waiting for the market to improve.
I've never known of a bank to pay HOA fees during that time.
The bank often stalls on the final foreclosure until right before they are ready to sell. As the bank is the first to get their money, often the HOA dues obligation is wiped out in the foreclosure. Not sure how this works if the HOA has a lien on the property.
Meanwhile, the HOA cuts back on maintenance, capital projects, building the reserve fund. When they reach the limit here, they raise dues. If a capital project just has to be done (leaking roofs, deteriorating decks, etc.) and there are no reserve funds to cover it, everyone is hit with an assessment that can be in the thousands.
So at the end of it all, you could own a condo with a lot of deferred maintenance issues, higher dues, maybe even an assessment, where the comps have fallen due to desperate owners selling their places for whatever they can get.
Prior to foreclosure, homeowners quit paying their HOA dues. They may not pay dues for several years. They often quit paying dues before they quit paying their mortgage. Eventually, the bank forecloses but this can take several years.
During the last recession, many bank owned properties sat empty for years. In order to sell, they would have had to lower the price and take a hit on what they had invested and which bank employee wants to do that? Not exactly a resume builder. Also, they may be waiting for the market to improve.
I've never known of a bank to pay HOA fees during that time.
The bank often stalls on the final foreclosure until right before they are ready to sell. As the bank is the first to get their money, often the HOA dues obligation is wiped out in the foreclosure. Not sure how this works if the HOA has a lien on the property.
Meanwhile, the HOA cuts back on maintenance, capital projects, building the reserve fund. When they reach the limit here, they raise dues. If a capital project just has to be done (leaking roofs, deteriorating decks, etc.) and there are no reserve funds to cover it, everyone is hit with an assessment that can be in the thousands.
So at the end of it all, you could own a condo with a lot of deferred maintenance issues, higher dues, maybe even an assessment, where the comps have fallen due to desperate owners selling their places for whatever they can get.
This has largely been our experience with over 15+ years of condo living. However, we've stuck with the upscale condos with fewer rentals (minimum rental periods), where absentee owners primarily use their condos as vacation or 2nd/3rd homes. These condos are less susceptible to foreclosures and thus, hold their values better than homes in neighborhoods with many properties in foreclosure.
Prior to foreclosure, homeowners quit paying their HOA dues. They may not pay dues for several years. They often quit paying dues before they quit paying their mortgage. Eventually, the bank forecloses but this can take several years.
During the last recession, many bank owned properties sat empty for years. In order to sell, they would have had to lower the price and take a hit on what they had invested and which bank employee wants to do that? Not exactly a resume builder. Also, they may be waiting for the market to improve.
I've never known of a bank to pay HOA fees during that time.
The bank often stalls on the final foreclosure until right before they are ready to sell. As the bank is the first to get their money, often the HOA dues obligation is wiped out in the foreclosure. Not sure how this works if the HOA has a lien on the property.
Meanwhile, the HOA cuts back on maintenance, capital projects, building the reserve fund. When they reach the limit here, they raise dues. If a capital project just has to be done (leaking roofs, deteriorating decks, etc.) and there are no reserve funds to cover it, everyone is hit with an assessment that can be in the thousands.
So at the end of it all, you could own a condo with a lot of deferred maintenance issues, higher dues, maybe even an assessment, where the comps have fallen due to desperate owners selling their places for whatever they can get.
There is standard language that a bank/mortgage-holder could pay delinquent HOAs and add them onto the mortgage obligation. This is not done frequently, but it theoretically could happen, especially if the home could easily be sold. Also, in many areas (if not all), a homeowner's associaton could foreclose for unpaid HOAs. In many cases, they may not bother, but if it becomes a big issue, especially if there is demand for the condos, it certainly could happen.
In the foreclosure process, the HOA gets their money from their lien if there are proceeds sufficient to cover that obligation after the first mortgage has been satisfied. If there are insufficient proceeds to cover that obligation, then the HOA is out of luck at that point, because the lien is cleared so the property can have a clear title and be passed on to a new owner. However, the HOA could still collect from the original owner if they desired to expend the time and energy on an additional legal proceeding. Typically, they don't bother because the owner probably doesn't have the money anyway, and it could end up costing more to go after them than they'd recover.
In North Carolina, HOA's can foreclose for unpaid dues. However, then what?
You can't sell it out from under the bank, as the have first dibs.
The HOA could rent it out until the bank completes its foreclosure, but that is an undertaking that few volunteer boards have the energy to pursue.
It would likely be to the financial advantage of the HOA if they did, as the rent would certainly be more than the dues.
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