Don’t Fret Over Moratorium Bill

Our office has been getting numerous calls from board members and managers concerned with the proposed foreclosure moratorium in the Ohio legislature. As has been widely reported across the State, the Democratic controlled House passed House Bill 3, which would place a six month moratorium on mortgage foreclosures. At this time, Kaman & Cusimano, LLC does not believe Ohio’s community associations have cause for concern. First, the legislation appears to only apply to mortgage foreclosures (i.e. lender banks) and not any other type of lien holder such as a condominium or homeowner association foreclosure. Additionally, this moratorium legislation now faces the daunting and extremely unlikely task of passing in the Republican controlled Ohio State Senate. With the Senate busy trying to fix the budget crisis and many senators questioning the constitutionality and effectiveness of moratorium legislation, House Bill 3 does not appear to have enough support to become law.

Even if a six month foreclosure moratorium would become law, prior experience has shown that a foreclosure moratorium may have a positive effect on community associations. As indicated at our recent Financial Crisis Seminar, the good news for community associations is that moratoriums often give the lender bank a chance to work out a payment plan and revised mortgage terms with the unit/homeowner. In order to file the new mortgage, the lender bank is usually paying the association in full, including attorneys’ fees and court costs, to remove the association’s lien and stop the association’s foreclosure.

As is indicated above, there is no need for Ohio community association board members or managers to fret over the impact of the passage of Ohio House Bill 3.

Mortgage Modification Legislation Dead

Good News! Last week, the Senate defeated a bill which could have had a negative impact on community associations across the country. Many board members, property managers and attorneys have been concerned about the possibility that this legislation would have allowed a federal judge to modify a owner's financial obligation to the association. Essentially, a judge may have been able to drastically reduce or even eliminate the fees owed by a delinquent owner to an association. While finding remedies for the financial and foreclosure crisis remains a national priority, this legislation had the potential to create a new crisis: crippling America's communities.

Realizing the gravity of the situation, the Community Association Institute's (CAI) Government and Public Affairs Team worked very hard to lobby Congress against this bill. Ultimately, their efforts, along with grass roots opposition from board members across the country, proved to be successful. This is a legislative victory for community associations all over America!

For more on the story, read the CAI's press release: Mortgage Modification Legislation Dies in Senate (word document)