The updates Sperlonga noted can be found in HUD’s Mortgagee Letter 2012-11. One change requires servicers to name and properly serve the HOA in any foreclosure proceedings so that HUD’s responsibility for unpaid fees can be eliminated or minimized.
Another requirement states that upon the completion of a foreclosure sale, the servicer must notify the HOA of the servicer’s interest in the property, and before conveyance to HUD, the servicer must pay HOA assessments that still remain after the foreclosure.
The changes took effect January 1, 2013.
In addition, the letter states servicers must take necessary steps to protect HUD’s interest in cases involving foreclosure actions from a condo/HOA on an FHA-insured mortgage. Servicers must also ensure pre-foreclosure condo/HOA fees/liens are removed from the property before getting transferred to HUD.
According to the letter, HUD will reimburse 100 percent of payments related to condo/HOA fees incurred between the date of foreclosure and the date the title is transferred to HUD.
“[S]ervicers who aren’t compliant with the new guidelines may miss out on reimbursements by HUD for payment of pre-foreclosure HOA fees, interest and late fees,” said Brent Stokes, SVP of Virginia-based Sperlonga.
Over the last 18 months, Sperlonga has worked toward building the industry’s largest national database for HOAs and has developed technology to help HOAs submit claims for payment to the correct servicing contacts.
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