I haven't talked to a single person (other than my banker) who doesn't want to either (a) make banks pay more back assessments to community associations in which they hold mortgages or (b) make banks expedite their foreclosure actions.
We are obviously at cross purposes with most banks who have absolutely no incentive whatsoever to take back title to these properties. What happens when the bank takes back title especially to a property that has no equity?
1. The bank must first pay the statutorily required back assessments (6 months in a condominium association and 12 months in a homeowners' association);
2. The bank must start paying regular and special assessments on that property like every other owner in the community; and
3. The bank must incur additional liability as a property owner to maintain, insure and repair that property and market it for sale.
What happens when the bank delays taking title back to the property?
1. The rest of the owners in the community continue to maintain the value of the bank's collateral by paying to maintain and insure the overall community (fixing the roof, maintaining the landscaping, etc.); and
2. The property is waiting for them to take back when the market rebounds.
The question then is how are banks managing to stall their foreclosure actions? Some are using the judicial process cleverly by filing ex parte motions. An ex parte motion asks for a court order before the other party (the association) has an opportunity to be heard on the request. An ex parte motion in a child custody hearing where a parent could flee the jurisdiction is one thing but an ex parte motion to set aside the bank's Final Judgment because there is no equity in the unit??
What other tactics are lenders' counsel employing lately? They are moving to vacate the certificate of title, moving to vacate final judgments (discussed above), moving multiple times to reschedule the foreclosure sales or simply not showing up to scheduled sales or canceling the sale date unilaterally by putting these options into their Final Judgments. Of course, there are defenses to these tactics that the association can raise but most don't have the money or energy to fight the banks.
Interestingly, lender's counsel usually must convince the Court that no defendant will be prejudiced by the granting of the ex parte motion being requested. An association not hurt after years of waiting for the bank to foreclose and to have a new owner start paying its fair share of assessments only to be delayed once again by legal maneuvering? It's hard to believe any trier of fact would easily buy that argument.
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