If you have a client looking at buying a foreclosure, you should be aware of a new rule from Fannie Mae that took effect on July 1.
Before Fannie will back a loan for a buyer, it now requires that the seller of the foreclosed home “clear all liens for delinquent homeowners association dues and condo assessments on properties acquired through foreclosure or deed-in-lieu of foreclosure.”
In other words, your buyer might not be able to get a loan if there are unpaid HOA or condo dues on the property.
And when a foreclosed home is owned by a bank, there’s an excellent chance that those dues aren’t being paid — HOAs don’t know where to send the bills, and banks don’t keep track of every property’s HOA membership. The HOA/condo lien only rears its ugly head when some tries to get a mortgage to buy it.
So, to save your clients the frustration of being denied a loan because of an HOA lien, you might want to have the seller do its research first to be sure it’s all clear.