In May of this year, the Federal National Mortgage Association (Fannie Mae) was ordered on appeal to pay a Florida community association nearly $100,000 plus costs and attorney’s fees. The ruling stems from a suit involving a foreclosed condo, past due association fees, and how the mortgage giant came into possession of the property.
Details of the Case
The case between Fannie Mae and the Alden Condominium Hotel stems from a debate as to whether or not Fannie Mae was required to pay past due association fees dating back to 2007 on a foreclosed condo. In Florida, where the condo is located, a Safe Harbor provision limits the amount of money that can be collected for late dues and assessments after a foreclosed home has passed back to the mortgage holder. Fannie Mae refused to pay the fees connected to the condo, claiming that they were protected under the Safe Harbor provision after foreclosing.
However, an examination of the records showed that there was a problem: according to documents, Fannie Mae had actually acquired the property in an auction. This meant that they had not actually foreclosed on the home, and were therefore ineligible for Safe Harbor protections against the fees associated with the property. When Fannie Mae still refused to back down, the case was taken to court. Both at trial and on appeal, the courts ruled in favor of the condo association.
What Does this Case Mean?
This case is a big deal for HOAs and community associations because, far too often, they both bow to pressure rather than face off against big banks in these kinds of conflicts. Financial institutions have almost unlimited funds and a penchant for being stubborn.This means that in many situations like this, an association would rather let a bank get away with ignoring fees and skirting the rules, rather than face the time and expense of challenging them in court.
This case shows that it is possible to take on financial institutions like Fannie Mae, if a community association examines documents carefully and works well with its legal team. By having their documents in order and having the will to fight, the Alden Condo association became the “David” in a story of standing up to one of the “Goliaths” of the mortgage industry.
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