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Does an hoa lien affect a mortgage loan modification?

Los Angeles, CA |

I am 11 months behind in my hoa dues. I was told that a lien would be filed but not enforced until
a later date. In the mean time I'm in the final process of receiving a modification on my 1st mortgage. I was told that I've made my trial payments but I think that's a mistake because I've just been making a regular mortgage payment. Any how I don't know the phase of modification I'm in and the lien hasn't been filed yet (i was just told it would be filed at tonight's meeting). Will this situation affect my modification and if so, besides paying it off (I'm paying it off but it can't be today) what are some other immediate solutions so this lien doesn't affect my modification?

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Attorney answers 3

Best Answer

Liens filed against the subject property may affect your modification. I've seen it happen before. However, you shouldn't bring it to your lender's attention. They usually request a copy of the most recent HOA bill as part of the application for a loan modification, so chances are they already know. In fact, a section in the RMA asks whether you are current on the HOA payments. I assume you answered no. If they placed you in a trial plan in spite of that, you may have dodged a bullet.

If it comes up, the lender will instruct you on what to do. For example, a client had a judgment lien on her property. Chase refused to modify the loan because there was a lien on the property. We informed them that the client was going to file for bankruptcy and avoid the lien, but they demanded actual proof. The client was forced to file, we avoided the lien, and then provided them with a copy of the discharge AND the order granting the Motion to Avoid lien. THEN Chase approved the modification.

An HOA lien is different from a judgment lien. A chapter 7 bankruptcy will only prevent the HOA from coming after the debtor and holding him personally liable for the debt. The lien will survive the bankruptcy, which means the HOA could foreclose even if you are current on your mortgage payments. As such, the lender may require that you settle the debt and the lien. Have you talked to the HOA about a repayment plan? Let them know you are in the process of applying for a loan modification which will make it easier for you to make the HOA payments and that you just need additional time. I can't guarantee it will work but as you mentioned, you can't pay it all now.

Michael Raymond Daymude

Michael Raymond Daymude


Excellent, thorough answer, Ms. Gutierrez. A good addition.


Yes, it could definitely affect your modification. The terms of any loan modification usually require a trial period and, at the end of the trial period, the modification becomes permanent provided your financial situation remains the same.

Obviously, that would not be the case if a lien was placed on your unit. You can ask the HOA to hold off filing a lien. Perhaps they would accept partial payment now with a promise to pay the remainder by an agreed date.

It is also possible, since you do not know the status of your modification, that one will not issue unless the HOA verifies that your HOA does are paid to date, whether a lien has been filed or not. Good luck.

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I've seen permanent loan modifications denied or delayed because of judgment and HOA liens. I've also seen modifications where the lender catches up the HOA arrears but its extremely rare.
Assuming that the perm mod is actually provided, you will be left to deal with the HOA separately. Your options include: pay your neighbors what you owe; negotiate a payment plan or file chapter 13 to resolve the arrears. The HOA can foreclose, take title subject to the mortgages and evict you.

Get serious-saving your home is too important.
I'd recommend that you have your case evaluated and all title documents reviewed by an experienced attorney.

Janet Gutierrez

Janet Gutierrez


I agree with attorney Roberts. If you do get the modification, and you can't pay the total amount due at once, I would meet with a bankruptcy attorney. You could pay back the HOA dues in 3-5 years. However, there are many important things to consider. You should never file a chapter 13 on your own. Most attorneys will give you a free consult, and some attorneys will put most (if not all of their fees) in the chapter 13 Plan so you may not need to pay as much up-front as you think.

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