I was able to attend the Sun City Recreation Center (RCSC) meeting this morning. One of the residents had invited me to attend. She did a great job presenting the issue.
I was joined by Rhett Laufenburger, a lender from AmeriFirst Financial and German Salazar, Vice President General Counsel for AmeriFirst Financial.
I was glad to see more than one resident who was in attendance was concerned about the issue of FHA product availability in Sun City. Rhett, German and I were able to speak to representatives of Sun City Recreation Centers management after the meeting.
While the resident’s position is that SCRC should amend the by-laws to exempt foreclosures from the mandatory fees at change of title, it is clear the Board of Directors and management have questions they wish answered before making the requested changes. It is also clear RCSC management are hopeful FHA will amend the free assumability clause, soon.
After the Sun City meeting, we met with Sun City West Board President Wanda Schnabel, Vice President Peggy Robbins and representatives of the Sun City West Recreation Center management.
After speaking with Sun City and Sun City West directors and management, I came to realize some of the resistance to changing by-laws is due to a misunderstanding of the request. Both organizations stated their attorney had advised them to make no changes in the mandatory fee, sighting fairness to all owners. As they explained their position it became clear to me that both organizations misunderstood the request being made by their residents.
The legitimate concerns voiced were: the association needs every property owner to pay the fee so that infrastructure can be maintained, and no one should have membership and use without paying the fee. Both good points.
And that is where the misunderstanding is. The request by residents to amend the by-laws centers around foreclosure action only, specifically FHA foreclosure. The association can and should charge the mandatory fee on purchases. And when the foreclosing entity sells the property to a new homeowner, that new homeowner should be charged the fee as well.
The request from residents is to not charge the mandatory fee to foreclosing lenders. Let the lender foreclose, place the property back on the market, and sell it. According to Sun City RCSC officials, less than 0.16% of properties were foreclosures last year. While I don’t have an estimate from Sun City West, their management acknowledged foreclosures are very rare in their community as well.
So, what is the real monetary cost of allowing lenders to foreclose without paying the mandatory fee? What is the real monetary cost of incentivizing FHA to not lend? How many potential FHA buyers will not buy? How many property owners will not be able to re-finance?
How many property owners will not be able to complete a FHA reverse mortgage? Will their inability to complete a reverse mortgage affect their ability to maintain ownership in the community?
Looking ahead, will the property values be affected if the community is a non-FHA community? Will the future sale-ability of properties be affected?
Property owners and management are right to be concerned over maintaining adequate funds to maintain the amenities of Sun City and Sun City West. WeMAR encourages both Sun City and Sun City West to further explore all the ramifications with community members, and encourages community members to voice their concerns to Recreation Center management.