That Ugly "F" Word Understanding and Avoiding Foreclosure

"Foreclosure" is a word no co-op or condo owner wants to hear, but when residents fall behind on maintenance fees or common charges - when their financial burden becomes too large to shoulder - sometimes foreclosure can be the only answer.

Most co-op and condo boards, however, will do whatever they can to avoid foreclosing. Not only can it become a highly emotional situation, it also can become an expensive problem that takes months or even years to work through. For all parties involved, finding an alternative is almost always preferable to foreclosure.

With the recent economic downturn and subsequent rise in unemployment, it's not unusual for homeowners to find themselves financially in over their heads. "Unfortunately, it's part of the business," says Steven Schneider of The Back Office, a board operations support firm based in Manhattan. "Especially after September 11, there are some people who just can't meet their obligations."

According to The New York Times, however, despite the downturn, foreclosures nationwide are declining. The number of delinquent loans ending in foreclosure has dropped from 30 percent in 1998 to around 20 percent at the end of last year. These days, more lenders are looking to the long-term, trying to keep loans intact by finding alternative methods to help homeowners get through the economic rough patch and get back on track.

How Did We Get Here?

It can happen so fast - a person loses a job or perhaps an investment fails. Soon, they are missing maintenance fees or common charge payments, and before they know it, they've fallen into serious trouble with their building's board. Most foreclosures occur because of delinquent maintenance fees, although sometimes other proprietary lease breaches - such as a significant house rule infraction - can set the dominoes in motion. If the resident has not rectified these problems within a set amount of time, the building's board can vote to foreclose.


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  • I found this information very helpfull. Since I had a recent scare and my fiance almost died. We were both out of work for a few weeks and I became behind on maintenance payments. I did happen to catch up but I was issues a threatening letter saying my lease was cancelled. This article helped quite a bit. I always wondered what are some of the legal actions they could possibly take with late maintenance paynents. Thank you to the writer.