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Something i have yet to see asked

Started by RobertC14 • 10 replies • 1429 views

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RobertC14 (Colorado)
Posts: 78
Posted:
how is the government shutdown affecting your HOA? how would a failure to raise the debt ceiling affect an HOA should this come to pass?

i'm sure if this drags on much longer i anticipate we will start seeing the effects of it from an HOA regulatory standpoint, dues? foreclosure?, defaults?, etc.

if we fail to raise the debt limit i think that will only amplify the sequestration and shut down effects.

i am just curious if anyone running an HOA has seen any ill effects of the shutdown yet and what your feelings on failing to raise the debt ceiling will effect HOA's?

i may be overly paranoid or over analyzing the situation but it was something that popped into my head and i wanted to get every ones thoughts on it.
RobertC14

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DaveD3 (Michigan)
Posts: 796
Posted:
Personally, I can't see any scenario where it would make a bit of a difference to an HOA's operation.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Only the federal government is shut down; for state and local governments it is business as usual.

About the only federal agency that most HOA's deal with is the IRS. Any pending business with that agency will likely pend a bit longer. There may be other agencies, such as HUD, whose shutdown may effect Fair Housing complaints.

Perhaps most problematic for those buying and selling homes is that FHA may be out of business for the time being, so loan applications will not be processed. Ditto for VA loans.

Otherwise, I do not see the shutdown as a problem for most HOA's.
BruceF1 (Connecticut)
Posts: 2,535
Posted:
Quote:
Posted By LarryB13 on 10/09/2013 12:08 PM
Only the federal government is shut down; for state and local governments it is business as usual.

About the only federal agency that most HOA's deal with is the IRS. Any pending business with that agency will likely pend a bit longer. There may be other agencies, such as HUD, whose shutdown may effect Fair Housing complaints.

Perhaps most problematic for those buying and selling homes is that FHA may be out of business for the time being, so loan applications will not be processed. Ditto for VA loans.

Otherwise, I do not see the shutdown as a problem for most HOA's.

Except if unit owners depend either directly, or indirectly, on getting paid they may fall behind on assessments. Government employees on furlough, disabled or retired veterans may be affected. People who work for government contractors (other than defense contractors) may be temporarily furloughed. Those who have vacation benefits saved up may be able to draw them, but otherwise, there could be some problems.
TimB4 (Tennessee)
Posts: 21,059
Posted:
First of all, living in the DC area, I can tell you that the impact really isn't seen yet. All that has been done is political posturing over the shutdown.

This Friday all federal employees will still receive a paycheck. It will be less than a normal paycheck but they will still receive one. This is because it will only cover through Sept 30 vs. Oct 5.

Based on bills in congress, it appears that all federal workers will receive back pay (Senate hasn't passed it yet but said they will and the President said that they will sign it). Furloughed employees are allowed to apply for unemployment benefits. Once they receive back pay, the unemployment benefits will need to be repaid.

As Treasurer, I've seen no change in payments of our annual Assessment. The Board has agreed that if asked, we would waive any late charges for a federal employee that posts due to the shutdown. However, that issue hasn't come up yet.

Following the politics of the issue, I expect the shutdown to go through the end of the month if not longer.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Robert

As you said:

i may be overly paranoid or over analyzing the situation but it was something that popped into my head and i wanted to get every ones thoughts on it.

If not paranoia, then at least premature. I believe it will pass shortly and people will soon forget about it.

AllisonD (Florida)
Posts: 449
Posted:
The federal government does not have to balance its budget, this is why it cant pay its bills. It could at the beginning of the year, but now, its run out of money. A properly run HOA's budget will always balance because income will always equal expenses plus reserves; you will never budget for an expenditure without funding the expenditure. And if you are really smart, you will budget at least 10% more income to make up for those who do not pay dues, so you do not run out of money. But if everyone pays, an HOA should not run into problems.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By BruceF1 on 10/09/2013 12:32 PM

Except if unit owners depend either directly, or indirectly, on getting paid they may fall behind on assessments. Government employees on furlough, disabled or retired veterans may be affected. People who work for government contractors (other than defense contractors) may be temporarily furloughed. Those who have vacation benefits saved up may be able to draw them, but otherwise, there could be some problems.

Bruce,

You had me worried so I just checked and found that my Social Security check was deposited today as it should have been.
BruceF1 (Connecticut)
Posts: 2,535
Posted:
I know this has nothing to do with HOAs, but this week happens to be my granddaughter's senior class trip to D.C. As you can guess, many things normally on the agenda for these trips are now off the agenda: no visits to the Smithsonian, government buildings or memorials. It's going to be a lousy trip for these kids; certainly different from that of previous classes.
SheliaH (Indiana)
Posts: 6,964
Posted:
I saw an article about this recently (can't remember where, sorry!) and as I recall, there are a few ways this may ultimately affect HOAs:

As of Oct. 1, the federal court system had enough money to run for the next two weeks - after that, things could stop. That would include the US bankruptcy court, so if a homeowner declared bankruptcy, it could take more time before the HOA knows what'll happen with its debt. My own HOA has a hearing scheduled for Oct. 22 involving a deadbeat who's declared chapter 13 a second time (to avoid paying us) and the hearing was to address our request to lift the automatic stay so we can foreclose on her

The Federal Housing Administration (FHA)has a tiny portion of workers still on the job, but due to reduced staff, far fewer loans willl be approved, potentially impacting home sales (although Fannie Mae and Freddie Mac loans are not expected to be affected.) FHA will also be concentrating on single family homes during this time, so condo sales may be affected.

Non-essential federal employees have been laid off, so there may or may not have issues with delinquent assessments. Employees working in essential services will get paid, but there could be delays. There may also be delinquency issues from residents who are military veterans whose benefit checks could be delayed.

Finally, payments to public housing authorities may be stopped or delayed, and so anyone who is paid section 8 for renting out their units may have an issue - check with your local housing agency

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
FredB4 (Ohio)
Posts: 375
Posted:
At least one person that I know of in our association is out of a job at the moment (probably more now or soon) and since many people live from week to week, yes it will start affecting some associations since they will not be able to keep up with their dues.

Your not being paranoid and we can only hope it will be short lived but the solution will most likely only be very temporary and we will be back in the same situation in another few months. Maybe with threats of reduce social security and Medicare or else...

A bigger worry is increased talk in Washington about eliminating the FHA backing of mortgages along with Freddie Mac and Fannie Mae which accounts for about 90% of condo mortgages (Not sure about the percentage of HOA's). Most people aren't even aware that their mortgage is held by Fannie or Freddie and backed by the FHA because they make their payments to another lender who has sold their mortgage, but still maintain it. Maybe the next thing will be "get rid of the FHA, Fannie Mae and Freddie Mac or else ...

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