Foreclosure Crisis Presents Challenges for Lenders When Homeowners and Condo Associations Are Involved

With foreclosure filings at unprecedented levels, associations are facing high assessment delinquency rates since generally when a homeowner stops paying his or her mortgage, he or she also ceases paying any assessments. An August 2009 report by the Task Force on Residential Mortgage Foreclosure Cases, issued at the request of the Florida Supreme Court, noted that community associations are being “severely impacted” by the foreclosure crisis. During the pendency of a foreclosure proceeding, associations typically do not receive assessments as lenders are only responsible for assessments after taking title to a property. Given the volume of foreclosure filings, lenders and courts are struggling to diligently prosecute cases. The result is that associations, mired in what is oftentimes a delayed foreclosure process and seeing their finances dwindle, are increasing legal pressure against lenders and are taking radical measures in an effort to speed things up.