MITIGATE HOA SUPER LIEN RISK AND IMPROVE DUE DILIGENCE
THE FIRST STEP TO PREVENTING UNFORSEEN LOSSES
In super-lien states, HOAs may foreclose on a property by displacing the first-lien mortgage position, as permitted by their governing rules and state law. With over 27 million housing units in the U.S. subject to an HOA, this presents a significant risk to lenders, servicers and investors. The current escalating risk environment of increased forbearances and loan modifications makes efficiently identifying HOA properties and delinquent HOA fees all the more important.
Complimentary eBook:
HOA: Mitigating Risk and Performing Due Diligence
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SCALABLE, AUTOMATED APPROACH
Black Knight’s HOA Indicators offers a cost-effective, automated way to help you determine if a property is part of an HOA. This intuitive and reliable solution is used for origination due diligence, portfolio risk management, and monitoring potential risk for investors.
Utilizing a match and append process, HOA Indicators quickly identifies the properties in a portfolio subject to an HOA. A “Yes or No” flag is provided, so users can focus on specific properties for further evaluation and monitoring.
WHY YOU NEED AN AUTOMATED HOA SOLUTION
Now more than ever there’s a vital industry need for a fast, scalable approach to identify HOA properties:
- There are 22 super-lien states, along with Puerto Rico and the District of Columbia
- 73 million U.S. residents are subject to an HOA
- 61% of newly built single-family homes are associated with an HOA
- Currently, there are significant spikes in homebuying and refinances, as well as foreclosures and forbearances
Critical Use Cases
HOA Indicators is a critical and cost-effective first step for mortgage due diligence and risk mitigation processes. The solution can be used to support numerous use cases across the mortgage life cycle.
Loan Origination
Lenders can efficiently automate and scale HOA property identification as part of the origination due diligence process.
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Determine if there are any red flags in the HOA community, such as too few owner-occupied units to meet GSE requirements
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Learn how the HOA manages the community to ensure it meets the lender’s guidelines
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Discover if the HOA community has a delinquency rate of 15% or higher: FHA will not back loans associated with those HOAs
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Identify potential HOA super lien foreclosure risk in the event loans are sold to GSEs and other investors
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Identify HOA properties with the potential for encumbrances on the title
Loan Servicing
Servicers can use HOA Indicators to support their default, loss mitigation and due diligence processes.
- Proactively identify properties that are part of an HOA and located in super lien states
- Identify HOA properties with delinquent HOA fees and locations where forbearances are increasing
- Use HOA Indicators to identify and monitor loans located in areas with greater foreclosure risk
- Perform due diligence when purchasing MSRs to determine the HOA risk factors prior to boarding
Capital Markets
Asset and portfolio managers can leverage HOA Indicators to support whole loan due diligence for both pre-bid and post-bid scenarios.
- Use as a first step to identify liens and/or delinquency information
- Determine if properties with HOA account delinquencies have pricing implications for buying the asset
- Understand the risk of assets that are owned and take steps to mitigate investor risk
KEY FEATURES AND BENEFITS
Fast, cost-effective approach to streamline the HOA identification process
Database that covers more than 55 million properties
National property coverage that allows for property identification in super lien states
Industry leader in data standardization and matching property addresses
Seamless match and append solution that delivers reliable information
Black Knight unique ID, allowing HOA Indicators to be combined with other data sets for additional property insights
Can be combined with other Black Knight HOA solutions to obtain HOA contacts, monitor HOA liens and take HOA lien curatives actions
Quick delivery turnaround times
Offered on one-time or ongoing basis