In an interesting twist to the massive wave of foreclosures in residential mortgages, a Condo Association Seeks Foreclosure On Wells Fargo.
The Residences at the Bath Club Condominium Association in Miami Beach is pressing a foreclosure action against Wells Fargo as trustee for an investment pool that owns the mortgage on a unit that isn’t paying its maintenance fees.
The lender owes $32,252 in late maintenance fees on the unit it took back more than a year ago.
Determining exactly who is on the hook is itself difficult. The original mortgage was issued by Mortgage Loan Specialists of Irvine, Calif. A spokeswoman for Wells Fargo said it was only the trustee for the bondholders who invested in a securitized mortgage pool. The servicer of the loan is Impac Funding Corp. of Irvine, Calif., which shares the name with the company that issued the mortgage-backed securities and is also named in the foreclosure suit, Impac Secured Assets Corp.
The lender needs to come up with the past due maintenance fees by Friday morning or it could lose the oceanfront condo in a foreclosure auction. The unit sold for $1.45 million during the height of the condo boom, according to Miami-Dade County property records.
“An association foreclosing on a bank?” asked Bill Raphan, who runs the Fort Lauderdale branch of Florida’s Office of the Condominium Ombudsman. “I can’t say I have heard that before. It will create an interesting precedent. Associations often complain lenders don’t pay their dues.”
Attorney Ken Direktor, who leads Becker & Poliakoff’s community association practice, said he encourages his lawyers to aggressively go after lenders who fail to pay association fees.
If Unit 901 sells on Friday, the association will recover the $32,252, including legal fees. Wells Fargo would keep the rest of the sale’s proceeds.
“We increasingly see banks reluctant to take control of a unit,” said Breitner, with the Barthet Firm in Miami. “They would rather keep a unit in limbo and wait until the market comes back.”
I discussed this problem recently in Homeowner Begs Bank To Foreclose.
People are defaulting on units but banks will not foreclose. The association dues (upkeep and insurance on the building itself) must then passed on to fewer and fewer owners. This puts pressure on still more people to abandon their units. Legal costs are mounting everywhere.
In many cases the back association fees are more than the unit is worth. Over time, this problem is going to increase, dramatically.
Just a few years ago people were standing in line and entering lotteries hoping to secure the right to buy these units. Now they cannot give them away. Banks don’t want the units, no one does. What a nightmare. Welcome to Condo Hell.
Mike “Mish” Shedlock
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