May 16, 2016

Massachusetts Congressional Delegation Urges FHFA to Delay New Policy on “Super Lien” Laws Affecting Homeowners in Community Associations

Text of the letter available here (PDF)

Washington DC - The Massachusetts congressional delegation wrote to urge Federal Housing Finance Agency (FHFA) Director Melvin Watt to delay implementation of the agency's new policy on state super lien laws until the agency has obtained and considered public comments on the issue.

Massachusetts, 21 other states, and the District of Columbia have "super lien" laws giving community association liens priority over first mortgage liens. This allows community associations to foreclose on a property to collect the "priority" portion of their lien, which usually consists of up to six months' worth of owed fees. These super lien laws often encourage first mortgage lienholders to temporarily cover delinquent association fees, allowing associations to maintain upkeep without needing to raise fees on other residents of the community.

Last year, FHFA announced a new policy that it will not consent to the foreclosure of Fannie Mae or Freddie Mac liens in connection with "super lien" laws.  The policy represented a new interpretation of FHFA's obligations under the Housing and Economic Recovery Act of 2008 (HERA).

The Massachusetts congressional delegation wrote, "Given the widespread effect that FHFA's new policy will have, we believe the agency should solicit and consider public comments before implementing it.  Accordingly, we request that FHFA delay implementation of its new policy on state super lien laws and set up a process for obtaining and reviewing public comments on the issue. FHFA should consider how its policy would advance each of its statutory purposes, including its obligation to ensure that ‘the operations and activities of each regulated entity foster liquid, efficient, competitive, and resilient national housing finance markets.'"

Read a PDF copy of the letter here.

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