Unpaid Homeowners Association Fees Signal Possible Mortgage Default

According to ""Sperlonga Data and Analytics"":http://www.SperlongaData.com, a Virginia-based subsidiary of national real estate asset firm ""MMREM"":http://www.mmrem.com/, unpaid homeowners association (HOA) fees are a clear sign of potential mortgage default.
[IMAGE] ""In the majority of the cases, borrowers will stop paying their HOA fees before they stop making their mortgage payment,"" said Matt Martin, Sperlonga's chairman and CEO of MMREM.

Sperlonga's newest service, Loss Mitigation Association Surveillance (LMAS), was designed to help mortgage servicers reduce risk after a loan modification by alerting lenders when a borrower is falling behind on HOA fees, which are historically difficult for lenders and servicers to track.

With the new service, lenders can identify potential defaults or troubled modifications months before the borrower misses a mortgage payment.

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""Knowledge that a borrower is late or delinquent on HOA fees will allow servicers to get in front of a loan that's about to default,"" Martin explained. ""And in the case of loan mods, it can be even more critical to minimize losses.""

LMAS provides an authorization form for servicers to execute with the borrower during the loan modification process that allows Sperlonga to communicate directly with the HOA. Sperlonga then monitors monthly payments and notifies the servicer if the borrower misses a payment, providing a warning to trigger servicer attention that a potential default is looming.

In addition to alerting servicers to HOA delinquencies, Sperlonga can also negotiate inflated HOA claim amounts for servicers, helping lenders and servicers make more educated decisions.

""Essentially, Loss Mitigation Association Surveillance allows for greater communication between servicers and HOAs, which is what they both want,"" Martin said, adding that HOAs and servicers frequently lack basic contact information and do not know how to communicate with one another.

""This service helps associations get paid what is due, so they can keep operating while at the same time minimizing expense for lenders and their servicers in pursuing either home retention or remarketing the property,"" Martin added. ""It helps avoid delays that result in excess inventory in the market, and that's good for everyone.""