Escrowing HOA fees? (MD)

Started by StephenC4 • 5 replies • 7463 views

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StephenC4 (Maryland)
Posts: 25

Posted:

Anyone know if HOA assessments can be put into escrow? We have some homeowners (not many) who are significantly behind in their assessments. We're searching for ways to get them caught up and someone suggested looking into whether they can be included in escrow and paid by the mortgage company. I haven't found anything yet that says one way or the other. I've never seen it done, but I don't know that it can't be.

TimB4 (Tennessee)
Posts: 21,059

Posted:

That would have to be an arrangement between the mortgage holder, the owner and the HOA.

You might do better just encouraging them to use their banks bill pay option - where the bank mails the HOA a check each month. My Association has several people that does this.

Tim

RichardP13 (California)
Posts: 1,767

Posted:

Stephen,

When I worked for Countrywide Home Loans, there was discussions going around between lenders and HOA's to escrow HOA dues along with insurance and taxes. While in principal it sounds like a good idea, unfortunately in many cases, it was difficult finding out who the HOA was or where the payments should go to. Also, servicers of loans will only pay on an annual (insurance) or bi-annual (taxes) basis. Many HOA's, including my own, pay our dues on a monthly basis. In addition, the other problem would be the communication between the HOA and the servicers when a special assessment was being implemented or monthly or annual dues were being increased. Who would the HOA contact, especially when loans are re-sold n a regular basis.

StephenC4 (Maryland)
Posts: 25

Posted:

The payment schedule seems like it could be a problem (our dues are currently quarterly), but the HOA Board has flexibility under our bylaws and CCR to permit annual payment schedules, so we could coordinate annual payments in advance, if it would facilitate it. The tax departments (and I don't have much faith in county government) manages to get the bills for taxes to the right mortgage servicer. I assume they send a note when the loan is sold like they do to the homeowner, but perhaps not. We could also require the homeowner to notify the HOA if the loan servicer changes, which, of course, they might not do, but that's really no worse than the position we're in now. I could see a special assessment being an issue, but those could just be billed outside of escrow.

It definitely seems complicated though. We have a few homes that don't appear to have ever paid an assessment since they moved in. I'm not sure why, but I'm looking into it. (The HOA was recently turned over from the developer.)

RichardP13 (California)
Posts: 1,767

Posted:

Stephen

The reason the counties get their monies is that there is a tax lien placed on the property when the bill is due and removed when paid. This goes on quarterly or bi-annually as the case may be. Could HOA's do the same, probably, but it will take a lot of work to do.

StephenC4 (Maryland)
Posts: 25

Posted:

I wonder if it would be simpler if we treated it like a water & sewer assessment. Our developer charged each home a water & sewer assessment (for 10 years, I think) to cover the cost of connecting to city sewer and water. Those fees are escrowed by the mortgage company and paid annually. However, the banks do not receive the bill from the developer, the homeowners do. Each homeowner must forward the bill to their mortgage servicer for payment. That would seem to simplify a lot of the complicating issues.

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