Monday, February 04, 2013

Federal Government Releases Qualified Mortgage (Ability to Repay) Guidelines

In January, the Consumer Financial Protection Bureau (CFPB) released its long-awaited federal Qualified Mortgage (QM) standards. The new federal guidelines, which are required by the Wall Street Reform and Consumer Protection Act (commonly known as the Dodd Frank Act), establish minimum requirements for all mortgage loans.

Under the QM standards, lenders are required to prove borrowers have the financial resources to pay mortgage principal and interest, insurance premiums, property taxes and association fees. Lenders that extend mortgage credit without fully documenting a borrower’s income and assets and ensuring the borrower has the ability to make all monthly payments will face stiff penalties and fines.

Fortunately, the QM standards consider community association fees as a key factor when determining if a borrower is qualified for a mortgage. Ensuring borrowers can afford to pay association fees will lead to stronger communities and prevent foreclosures.

Hopefully, these guidelines will create a greater degree of financial stability for community associations. However, lenders will have one year to implement the safeguards, with compliance being mandatory in January of 2014.

Lender documentation of association fees and special assessments required to meet the new ability to repay standard will be a key issue for our clients. It is very important for community associations to provide lenders assessment information in a timely manner.

Monday, January 21, 2013

MOST OWNERS ARE HAPPY WITH THEIR COMMUNITY ASSOCIATION


Nationwide, independent research has confirmed once again that most owners are satisfied overall with their community association.  Pollsters IBOPE Zogby conducted their annual community association poll and the results strongly corroborated with those from years past.
 
1.       On a scale of 1–5 (1=very bad; 5=very good), how would you rate your overall experience living in a community association?  About 70% of owners are satisfied with their communities, scoring either a 4 or 5 when asked.  Less than 10% said they were dissatisfied with their communities (a score of 1 or 2).
 
2.       Do you think the members of your elected governing board strive to serve the best interests of the community as a whole?  This year’s survey indicated an even higher rate of satisfaction with respect to Board members.  About 90% of respondents said they felt the Board members were absolutely or mostly serving the best interests of the association.
 
3.       Do the rules in your community protect and enhance property values, harm them, or make no difference?  Considering your overall assessments and the services provided by your community association, how would you describe the return for what you pay in assessments?  In recent years, finances have gotten tighter for many people, and it’s no secret that home values continue to remain flat or decrease.  But owners within community associations have less to complain about than the average homeowner.  About 76% of owners who were polled said that association rules actually enhanced their property values, and 81% said they got a “good” or “great” return on their assessments.
 
4.       The governance of community association is subject to differing state laws and regulations.  Would you like to see more government control of associations?  A whopping 80%-90% of respondents said that they would not approve of more government regulation of their associations.  One may assume that this means the associations are doing a satisfactory job of self-regulating, and that owners are content with the way associations are managed.
 
Of course, like anything, community living can have its ups and downs.  Pollsters asked what owners liked best about living in a community association.  Among the things liked best were neighborhood attractiveness, property values, less maintenance, and safety.
 
Community associations and their owners can feel a little bit better by knowing, at least for them, it’s all good in the neighborhood.