CDD Defaults (St. Petersburg: mortgage, houses, neighborhood)

[TampaKaren]

Another concern I have for current and future homeowners... It's a long article but stay with it; it's worth the read.

CDD defaults may be disaster for a swath of homeowners - St. Petersburg Times

Your thoughts?

[Pragmaticus]

Wow this is scary! Problem is developer fails, bank is in the hook to pay back the bond holders after foreclosing. Nothing would be done in upkeep for those neighborhood trashing their property values. Who would buy in those places in their right mind?

This is why one needs to do the research when buying homes in CDDed subdivisions. Default or no default, CDD's are tremendous burden and it may translate into tens of thousands of home value difference compared to those that don't have CDD (easy to do this based on current mortgage rate and ones expected stay in the house that they are buying).

Still I see CDD's continue to exist as that is the "easiest" way for the developers to pass debt (and responsibilty) to homeowners without being noticed (see that they come together with annual property tax?). But there should be a system in place to restrict a developer's access to these bonds in proportion to the units that are sold. They can't just bond their way and build a multi-million club house for "two" houses that they just sold.