Community associations need units to produce income. When the board of an association sees a delinquent owner's lender schedule a foreclosure sale, it typically hopes that this will result in either a payoff of all claims or a new owner that pays assessments (even if that new owner is the lender). Attorneys that represent associations often instruct them to put collection actions on hold pending the outcome of lenders' foreclosure sales. After all, why spend money that you may not be able to collect later? These realities make the relatively new phenomenon of lenders refusing to complete foreclosures a particularly frustrating one.
As noted by a recent article in the New York Times, lenders are in some cases declining to take possession of properties at the end of the foreclosure process, most often because the cost of doing so exceeds the rapidly diminishing values of the properties. In other cases, the complexities involved in sorting through financial records and bankruptcies make it difficult for the company that holds the loan to know what it owns.
Lenders typically lose 40 to 50 percent of their investment on every foreclosure. The purpose of their foreclosure actions is to take title of the properties, sell them, and recoup what they can. It is a sign of the times that lenders do not wish to take possession of some delinquent properties. This reality should cause community associations to consider whether they should simply proceed with their collection actions independently of lender-initiated foreclosures.
As noted by a recent article in the New York Times, lenders are in some cases declining to take possession of properties at the end of the foreclosure process, most often because the cost of doing so exceeds the rapidly diminishing values of the properties. In other cases, the complexities involved in sorting through financial records and bankruptcies make it difficult for the company that holds the loan to know what it owns.
Lenders typically lose 40 to 50 percent of their investment on every foreclosure. The purpose of their foreclosure actions is to take title of the properties, sell them, and recoup what they can. It is a sign of the times that lenders do not wish to take possession of some delinquent properties. This reality should cause community associations to consider whether they should simply proceed with their collection actions independently of lender-initiated foreclosures.
