C.R. from Bucks County, Pennsylvania writes:
Dear Mister Condo,
Do mortgage companies ever pay HOA dues other than the initial few payments?
Mister Condo replies:
C.R., it is not unheard of for mortgage companies to pay HOA dues in a few circumstances. Banks and mortgage companies do not typically do this but here are a few times I have heard of it being done. The first is foreclosure. If the unit owner is in default of their mortgage and the bank takes possession of the unit via foreclosure, they may agree to pay the HOA dues during the sales and liquidation process. This usually is just for a few months or the time it takes to liquidate the home through auction or sale. The second I know of is via escrow. The purchaser or the lender has decided that the HOA dues will be collected by the lender in escrow and then paid by the lender, much in the same way taxes or insurance might be. Again, this is unusual. The most common reason a bank pays fees for the first one or two payments is for closing purposes. Most lenders require one or two months fees up front and then pay those fees out of escrow. Thanks for the question!