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Freddie Mac

Homeowner association liens pose perils for buyers

Homeowner association liens pose perils for buyers

Could some of the nearly 67 million Americans who live in communities governed by homeowner associations — condominiums, master-planned developments, cooperatives and others — face much tougher underwriting and higher interest rates when they apply for a mortgage? That is the looming threat from the mortgage industry in areas where state laws give community associations "super-priority" liens on dwellings whose owners have not paid their assessments. Super-priority liens give a community association the power to initiate foreclosures and get first crack at the proceeds from the sale of a delinquent dwelling unit, ahead of the traditional first-lien position held...

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