New database helps loan servicers avoid losing property to foreclosure
Investors have taken the Sperlonga database to heart.
Portfolio investors and their servicers have the biggest need for the database at the moment, Stokes said. "It's the investors who are looking at pools of loans, and they want to do the due diligence to find out if there are any harmful outstanding HOA obligations. The servicers, both large and small, have these existing portfolios of nonperforming loans and have no idea how far behind delinquent borrowers are on HOA payments."
He added, "It's the servicers who are doing short sales or doing the loan modifications and are realizing they should do the HOA investigation at the beginning of these processes so they don't get to the end and find out at the last minute there are obligations and they have wasted a whole lot of time for nothing."
Conversely, the HOAs are in the same murky waters. They face situations where a borrower or a bank owner has not paid HOA obligations and they don't have a clue as to who is the right contact or even which servicer is handling the property.
"We help the HOAs find out who the investor/owner is of the REO property, who the servicer is and we put them in contact," Stokes said. "The investor/servicer can decide if the first mortgage lien position is at risk and whether it should be remediated."
The 350,000 or so HOAs in the country represent about 25 million individual addresses.
This, in some regards, is just the tip of the coming iceberg.
One in every 10 homes is part of an HOA, according to the Community Associations Institute (CAI), a Falls Church, Va.-based trade group, and 80 percent of every new construction will be part of an HOA. The CAI also estimates about 60 million people now live in residences where there are HOAs.
"The HOA obligation is going to become just as much of your consumer credit life as your cell phone bill," Stokes said. "Consequently, the past history of payment to an HOA will become a standard indicator of a borrower's ability to pay the risk associated with lending."
Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com.
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