By John Richards, CCAL; Attorney, Richards Law PC
As it pertains to the HUD issued Mortgage Letter 2020-04, Homeowners Associations, and the foreclosure moratorium I will do my best to address it here.
It is up to the HOA to decide how they want to proceed during this challenging time. HOA dues are not included as part of the moratorium on Federal Housing Administration (FHA) backed mortgages or loans. This is simply because the protections recently granted apply only to federally backed loans – which HOA dues are not.
However, best practices for our industry may yield a different result.
A best practice would be for each Homeowners Association to develop a policy on how to proceed for delinquent dues which may even include should the HOA file liens at this time? Should the HOA file a “Notice of Default” (which is not a foreclosure but starts the process)?
If each community develops its own policy, we also suggest that members be invited to the Board meeting at which the policy will be discussed (this is already required under Utah law in many instances) but the point is that we suggest the community be involved with creating such a policy, not just the Board.
Again, HOA assessments are not included as part of a moratorium. As it pertains to HOA collections in general, your collection process is not included in the moratorium but a community-adopted policy will make sure the Board is managing delinquencies but with the support of the community at this unique time.