Black Knight Data and Analytics has launched a new solution that protects mortgage servicers and investors from potential homeowners' association (HOA) super-lien losses.
As Black Knight explains in a press release, there are 22 ‘super-lien states’ where HOAs are allowed to take a first-lien position on a property in foreclosure with delinquent HOA fees, which, in turn, can result in significant losses for the servicer and its investor clients. Basically, these statutes relegate a servicer to ‘junior lien holder’ status when HOA fees are overdue on a property in foreclosure.
With Black Knight's new solution, HOA Lien Pro, servicers and investors can identify the potential risk of HOA super liens on properties in their mortgage portfolios and take action accordingly.
Basically, by identifying delinquent HOA obligations, a servicer can clear the late fees to the association and thus preserve first-lien status.
As Black Knight explains, it has been difficult for servicers to discover first liens brought by HOAs because under state law, the HOAs do not have to report such information.
HOA Lien Pro pulls data from title plants, considered the highest-quality source for accurate property information, to provide critical information such as lien-recorded dates, document numbers, document types, party names and lien amounts, the company says.
The solution can be used to perform ongoing monitoring for super liens or to conduct a one-time search. Loan and batch processing can usually be completed within a day, the firm claims.
‘Considering the explosive growth in community associations over the last 10 years, and the fact that 22 states now grant super-lien status to HOA assessment liens, this is a critical issue for mortgage servicers and the government sponsored enterprises,’ says Kevin Coop, president of Black Knight Data and Analytics, a division of Black Knight Financial Services.
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