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When a homeowner association forecloses on a house, how does that effect the mortgage on the home?

Lakeland, FL |

I've seen homeowner association foreclosures go to sale and are bought for less than $5,000. There is no mention of the mortgage lender in any of the documents.

Attorney Answers 3


  1. The mortgage lender is not named because their lien is superior and they will foreclose once the mortgage becomes past due. The borrower is still liable for the mortgage but probably will not pay it and will be stuck with a deficiency judgment. So the end result is the buyer gets a home at a great price but loses within anywhere from a few weeks to. Couple of years, the borrower loses their home but gets stuck with a deficiency judgment and ruined credit, and the bank gets to foreclose quickly because the person with any defenses to foreclosure is no longer in possession of the property.

    This communication is not intended to create an attorney/client relationship. It is always recommended you consult an attorney in person to discuss your case. The Law Offices of Stage & Associates practices state-wide and represents homeowners and community associations. Please visit our website at www.stagelaw.com.


  2. Normally the HOA foreclosure has no effect at all on the mortgage, since the mortgage is in first position. So, generally those people who are "buying" at those sales get nothing for their money except at best temporary use of the property. The HOA purchaser can dispossess the former owner, however once the mortgage lender forecloses, its sale will extinguish what the HOA sale buyer bought.

    Many people do not understand this and have lost a lot of money "buying" at these sales. In addition to the fact that the mortgage on the property is normally large, often exceeding the value of the property, the mortgage company is not allowed to give the HOA buyer any information about the loan, since the HOA buyer is not the borrower and the borrower's loan details are confidential.

    No one should consider risking their hard-earned money at an association foreclosure sale without the advice of a knowlegable real estate attorney.

    Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.


  3. Even when an HOA acquires title to a home as a result of a foreclosure, it does not extinguish a mortgage that may already be in existence on the property, especially a 1st mortgage. Eventually, the mortgage company will foreclose on the HOA as they have a superior interest, unless the HOA works out something with the mortgage company beforehand. When the HOA forecloses on a homeowner who is delinquent in their assessments it is usually because they hope to recoup some money by renting out the property until the mortgage company forecloses.
    People who purchase title to a home from an HOA foreclosure sale should be mindful of mortgages that may already be in existence on the property as they will likely have superior interest in the property and can foreclose on the new owner (especially the 1st mortgage).

    Please note that the response above is not meant to constitute legal advice and it does not establish an attorney-client relationship. You should contact an experienced attorney to assist you.

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