HOA Super Lien

SIFMA and several other trade associations submitted a statement of principles related to homeowner’s association (HOA) super liens. The letter was submitted to The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System.

The letter highlights the “safety and soundness” issue concerning the risks posed to banks, as originators and/or servicers, as whole-loan investors and as securitization sponsors and/or investors, in residential mortgage loans and/or residential mortgage-backed securities (“RMBS”), by certain state law provisions that allow HOA liens, in certain cases, to achieve a “super-priority” status that permits the extinguishment of a prior perfected and recorded first mortgage lien on the related property, sometimes without prior notice to the lienholder and often at a small percentage of the first mortgage balance.