U.S. Department of Housing and Urban DevelopmentRegulations DivisionOffice of General Counsel451 7th Street, SWRoom 10276Washington DC 20410-0500
RIN: 2501-AD78—Strengthening the Home Equity Conversion Mortgage Program
To Whom It May Concern:
As a member of the Community Associations Institute, I write to express my opposition to the Federal Housing Administration's (FHA) proposed rule concerning the reverse mortgage program for seniors in its current form.
I strongly oppose proposed language at §206.136(a)(1) that needlessly requires community associations in 21 states and the District of Columbia to surrender long-standing and accepted legal rights under statute. This proposed language exposes community association homeowners and residents, including senior citizens, to unacceptable risk of higher housing costs and unjust financial burdens.
Proposed Section 206.136(a)(1) and Preservation of Community Association Lien PriorityOver the past three decades, as many as 22 states and the District of Columbia enacted statutes providing limited priority for community association liens. Community associations—often known as planned communities, homeowner associations, housing cooperatives, and condominium associations—provide essential services, often of a governmental nature, to homeowners and residents. State statutes providing limited priority for association liens have been demonstrated to preserve the stability of community associations and protect the financial and property interests of homeowners and residents.
In direct conflict with the statutes of the 21 states and the District of Columbia that provide a limited priority for community association liens, the FHA proposes to exclude senior citizens living in these community associations from the agency's HECM program. The proposed requirement that community association liens in these jurisdictions be in a fully subordinate position to a first lien is in direct contradiction of these state statutory frameworks. Not only is this bad public policy, it is dangerous.
In the Great Recession, tens of thousands of community associations across the nation faced dire financial circumstances as lenders, including FHA mortgagees, failed to foreclosure on abandoned or vacant homes within reasonable time periods. These same mortgagees failed to perform basic maintenance on abandoned or vacant homes and condominium units, unjustly forcing maintenance costs on other homeowners. Mortgagees routinely delayed final steps required to complete foreclosures as a means to avoid paying assessments, forcing other homeowners to pay higher housing costs to fund essential association operations.
To protect their homes and communities, association homeowners were forced to preserve lender collateral without compensation. This unjust enrichment of lenders at the expense of community association homeowners is the very outcome that state association lien priority laws are intended to prevent.
The FHA's proposed rule threatens these pro-homeowner, pro-consumer statutes by excluding senior citizens from the HECM program. Rather than attack senior citizens in association lien priority jurisdictions, FHA should ensure compliance from the lending community with program rules and guidelines concerning foreclosure, property preservation, and title conveyance.
I urge FHA to withdraw its proposed HECM rule and submit a revised proposal that does not endanger the financial security of community associations and the senior citizens who have chosen to call a community association home. The FHA should respect state statutes that provide limited priority for community association liens and require FHA-approved mortgagees to follow state law and program guidelines.
If withdrawing the rule is untenable, FHA must strike the proposed Section 206.131(a)(1) from any final rule.