With a HOA or AOA do homeowners have much “interest” in anything besides the sticks of the unit? Apparently, not. Depending on the state laws and knowing the ways the rehypothecation of the homeowners’ collateral works with the banks, it appears it would be prudent to always file a mortgage lien in the records office… some states, like Hawaii, are first come first served. It appears Banks don’t file mortgage assignments until the homeowner defaults because they are reusing the collateral and merely pledged the note to the securitized REMIC trust, until default.
Invest Vegas, LLC v. 21st Mortgage Corp. (In re Residential Capital, LLC), 556 B.R. 555 (Bankr. S.D. N.Y. 2016) –
A debtor held a note secured by a first priority deed of trust on property that was also subject to a super priority homeowner’s association lien securing delinquent assessments against the property. The HOA foreclosed its lien after the debtor filed bankruptcy. The issue for the bankruptcy court was whether the HOA violated the automatic stay, and thus whether the deed of trust was extinguished by the foreclosure.
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