HOAs Want Banks to Pay Association Fees

Home Owners Associations for condos and developments are hurting for fees due from bank owned units and homes. Traditionally, when a condo or house is foreclosed on the HOA doesn't have a way to make up for the lack of payments that property would have contributed. They often have to up the fees for all members to make up for the empty spots. Now HOAs are experimenting with a new method: reverse foreclosures. When a owner defaults on their mortgage and stops paying the bank and the HOA, they will no longer wait for the bank to foreclose, the HOA will file it's own foreclosure notice and take over the title to the property. The HOA can't sell the property, since the lender still has a lien on it for the original mortgage, so the HOA will go to court and ask a judge to give the property to the lender, in exchange for fees that cover the missing HOA payments. While any HOA could try this tactic, it is popular in condos with extremely high mortgage default and foreclosure rates.