As lenders and servicers place greater focus on mitigating loan risks, the fintech community is launching a host of products to support those goals. One of the latest offerings zeroes in on properties that reside under homeowners associations. HOA-governed properties are more likely than first-lien properties to subject their mortgage backers to increased losses in case of defaults.
Being able to identify HOA properties quickly helps to streamline the origination process by marking an HOA mortgage for proper due diligence around the unit’s financial and legal status. Homes in HOAs require additional steps for originations, including changes to the monthly debt-to-income ratio, compliance with GSE owner-occupancy percentage requirements and delinquency fees for FHA loans, validations of legal risk encumbrances and foreclosure risk assessments in super-lien states.
Black Knight, a software, data and analytics company, released its HOA Property Indicators product this week.
“In this escalated risk environment, it is increasingly important for lenders, servicers and investors to quickly identify properties in HOAs,” Ben Graboske, president of Black Knight Data and Analytics, said in a press release. “Our comprehensive suite of HOA solutions provides a cost-effective and efficient way for lenders to streamline their origination processes, for servicers to be more proactive in protecting their loan portfolios, and to help reduce risk for the secondary market, particularly for properties in HOA super-lien states.”
In the 20 super-lien states — plus the District of Columbia — HOA foreclosures take priority over a first-lien mortgage, which can lead to significant losses for servicers and investors. Across the country, approximately 351,000 HOAs rule over about 27 million housing units and 73 million residents, according to Black Knight’s estimates.
The Property Indicators offering joins Black Knight’s HOA line, which includes HOA risk cycle management, lien monitoring, review for foreclosure activity and curative services.
The development cycle for HOA Property Indicators took about 12 months and Black Knight worked with an undisclosed large lender in beta testing. The company’s latest tool comes two weeks after launching its correspondent lending platform with AI decisioning.
