Foreclosed Properties Put Budget Pressures on Florida Communities
- Apr 22, 2008
By Anuradha Kher, Online News EditorFt. Lauderdale–Rising mortgage foreclosures are causing revenue shortfalls that pose significant threats to operating and maintenance budgets and to the health and security of many communities, according to a Florida community association mortgage foreclosure survey.The statewide study was conducted online from March 26-April 8 by the Community Association Leadership Lobby, or CALL. The study found that there is a direct correlation between rising mortgage foreclosures and corresponding decline in revenues from maintenance fees and other assessments in the state’s condo and homeowner (HOA) communities.Condominium owners made up the largest segment of respondents (64.5 percent), reflecting that this is a bigger problem among condo owners than among single-family homeowners.“When there is mold in one of the units in a building, it is likely to affect all the units at some point,” Lisa Magill, shareholder in Becker and Poliakoff’s Community Association Law Practice group, tells MHN. The law firm Becker & Poliakoff established CALL in 2003.More than 60 percent of the nearly 500 survey respondents said that banks and mortgage lenders now holding title to the foreclosed units or homes are not meeting their legal obligation to pay regular fees or other assessments to the association. More than 40 percent reported mortgage-foreclosed units or homes in their communities have been vacant for more than six months, with one in five citing vacancies of more than one year. CALL co-executive directors David Muller and Yeline Goin, attorneys with Becker and Poliakoff, say the survey results are a sober reminder that individual mortgage foreclosures are having a negative ripple effect that can undermine the property values and available services in entire communities.Magill, however, says, “This study does not show that Florida’s residents are fleeing, just that community associations are tightening their belts. Exterminators are coming in less and the hot tubs are not as warm—this is how it is impacting the residents.”Other findings of the survey include:• More than half (58.2 percent) of survey respondents statewide reported a definite increase in the number of mortgage foreclosures in their associations, with a particularly sharp increase of 71.1 percent in mortgage foreclosures in homeowners associations (HOAs) and a 52.9 percent increase in foreclosures in condominium associations.• One in four respondents (26 percent) say the mortgage foreclosure rate within their community over the past year had increased by at least 50 percent, with 13.5 percent reporting a jump of more than 100 percent.CALL’s executive directors are urging lawmakers to discuss ways to change some of the laws in the state that could help toward this problem.