Thomas M. Skiba, CAE, Chief Executive Officer of Community Associations Institute, issued the following statement regarding an agreement in principle concerning housing finance reform legislation announced by Senate Banking Committee Chairman Tim Johnson (D-SD) and Senator Mike Crapo (R-ID).
Chairman Johnson and Ranking Member Crapo are to be commended for their diligent approach in crafting legislation to reform our nation’s housing finance system. CAI members believe the first principle in successful housing finance reform must be to do no harm. The 64 million Americans living in community associations must continue to have access to mortgage financing that is competitive and tailored for this unique sector of the housing market.
In establishing a new housing finance system, Congress has a duty to ensure continuity of secondary market programs for community associations—planned communities, condominiums, and housing cooperatives. Further, Congress must strengthen secondary market standards concerning limited priority of community association liens, which allows associations to collect a portion of outstanding deed-based assessments during a foreclosure.
A key concern of millions of Americans is the financial wellbeing of their community association which directly impacts property values and overall health of the residential real estate market. Regrettably, recent actions by Fannie Mae and Freddie Mac to limit association lien priority statutes are counterintuitive and counterproductive. Short-circuiting multi-party stakeholder discussions, existing state statute, and issuing threats to deny consumers access to mortgage credit does not evidence deliberative policymaking. Community association homeowners and secondary market participants deserve better.
Currently, 22 states grant limited priority for association liens for outstanding assessments. Association assessments fund infrastructure maintenance, utility services, insurance of common property, and other critical community services. A uniform, national standard on association priority lien that takes into account extended foreclosure timelines is necessary to protect the financial viability of community associations.
Government chartered companies should not threaten or intimidate state lawmakers seeking to protect community association homeowners and residents from the negative impacts of prolonged foreclosures. Congress should reverse the GSEs’ misguided association priority lien policies and act to protect the long-term financial stability of the 24 million American households calling a community association home.
If you have any questions or comments regarding GSE Reform or lien priority, please contact CAI Government Affairs at government@caionline.org or (888) 224-4321.
