WILL THE NEVADA COURT OPINION ALLOWING HOA’S TO EXTINGUISH MORTGAGES AFFECT FLORIDA COURTS?

A RECENT NEVADA SUPREME COURT DECISION THAT ALLOWS HOMEOWNERS ASSOCIATIONS TO TRUMP MORTGAGE LENDERS IN FORECLOSING ON HOMES SENT A SHOCK WAVE THROUGH THE MORTGAGE INUDSTRY LAST WEEK.  THE RULING IN ESSENCE ALLOWS HOMEOWNERS ASSOCIATIONS TO SELL A PROPERTY TO THE HIGHEST BIDDER, FOR EXAMPLE $3,000, $4,000 OR $5,000 AND EXTINGUISH THE DEBT A MORTGAGE LIEN HOLDER HAS, WHICH IN THE NEVADA CASE WAS $885,000.00

THE NEVADA CASE CENTERED AROUND A $6,000 DEBT OWED TO THE HOA.  THE BANK WAS OWED $885,000.00 HOWEVER, AFTER SELLING AT AUCTION FOR $6,000.00, THE COURT RULED THAT THE SUPER PRIORITY LIENS HELD BY HOA’S FOR UNPAID ASSESSMENTS TAKE PRECEDENCE OVER FIRST TRUST DEEDS HELD BY BANKS OR OTHER MORTGAGE LENDERS.  THE NEVADA COURT FURTHER HELD THAT HOA’S DO NOT NEED TO GO THROUGH THE COURT SYSTEM TO SEIZE THE PROPERTY.   THE RULING ALLOWS HOA’S TO LEGALLY FORECLOSE ON THE PROPERTY BY SELLING THE PROPERTY AND EXTINGUISHING THE DEBT.

WHILE THE LAW COMPELS HOMEOWNERS TO PAY THEIR DUES AND ASSESSMENTS TIMELY TO THE HOA, THIS LEAVES THE BANK’S HOLDING MORTGAGES HIGH AND DRY TO FORECLOSE THE PROPERTY TO SATISFY THE DEBT. LENDERS VIEW THE DECISION AS A RECIPE FOR DISASTER, SINCE IT WILL SET THE PRECEDENT FOR OTHER STATES TO DO SAME.

IF FLORIDA WERE TO FOLLOW SUIT,  HOMEOWNER ASSOCIATIONS THAT HAVE DELINQUENT MAINTENANCE AND ASSESSMENTS AND NEEDED TO COLLECT, COULD SIMPLY SELL THE PROPERTY TO SATISFY THE LIEN AMOUNTS DUE THEM, AND MORTGAGE DEEDS OF TRUST WOULD BE EXTINGUISHED.

THE  NEW LAW GIVES THIRD-PARTY INVESTORS A HUGE WINDFALL SINCE PURCHASING PROPERITES FROM AN HOA WITH MORTGAGES, SOMETIMES TWO MORTGAGES, IS A SHORT TERM WIN.  ONCE THE MORTGAGE WAS AUCTIONED IN FORECLOSURE, THAT LIEN BEING CONSIDERED SUPERIOR IN FLORIDA COURTS, TRUMPED THE CERTIFICATE OF TITLE TO THE INVESTOR, CAUSING THEM TO LOSE THEIR INVESTMENT.

IT REMAINS TO BE SEEN THE LONG TERM EFFECTS THIS WILL HAVE FOR NEVADA HOA LIENS AND FORECLOSURE LAW AND WHETHER FLORIDA AND OTHER STATES WILL FOLLOW SUIT.

 

TRUST  |   COMMITMENT  |   RESULTS

 

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Distressed Student Loan Borrowers have options

Struggling private student loan borrowers, who have gone into default, and having trouble making ends meet, have options.  The Consumer Financial Protection Bureau, who has studies 5,300 private student loan complaints, have reported that of the over 5,000 loans analyzed during a one year period, complaints rose by more than 37 percent, most of them centered on lack of options available for modifying the loans.  The bulk of the complaints were centered on:

1.   Borrowers unaware that they had options to lower the payments or restructure their debt.

2.  Borrowers not yet earning sufficient income, and having a large balance due all at once.

3.  Borrowers complaining that servicers did not offer repayment plans, or forbearance plans that required a larger payment when the balance became due.

While forbearance typically ends one or two years after graduation, the interest rates of yesteryear, 1% and 2% are just that, a thing of the past.

Todays students face 4, 5 and even 6 percent interest when in reality, just starting out in the workforce, they are making half of their expected salary.

According to the Consumer Financial Protection Bureau, more than 7 million Americans are currently in default on student loans, totaling more than 1.2 trillion in outstanding loan debt.

To combat this, student loan companies are offering their borrowers options to avoid default.  Options consist of:

  • Debt restructuring
  • Lower payments due on financial analysis of income/expenses of individual borrower
  • Longer amortization schedules – extending life of the loan

 

Default in student loans, which results in derogatory information on the student borrowers credit score,  has a lingering affect, catapulting into hurting the borrowers chances when applying for a job, obtaining a loan for housing, or renting, and so many other effects.

At my firm, we have years of experience negotiating student loan debt and can speak to your loan provider to see what options exist for you. If you are treading water and barely making ends meet, default is not necessary.

The best advice is to speak to a professional to intervene and seek lower payments and/or lower interest rates.  We are here to help. The first consultation is always free of charge.

 

TRUST  |  COMMITMENT  |  RESULTS

 

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