Seller/Servicer Memorandum 23-02

SB143 signed into law on July 8, 2022 to be effective on October 6, 2022. Section 2 amends AS 34.08.040 by adding a new subsection (b), which provides that for the purposes of AS 34.08.040(a), the application of AS 34.08.470 to a common interest community created under AS 34.07 before January 1, 1986, with respect to an event or circumstance occurring after January 1, 1986, does not invalidate a provision in the declaration of the common interest community, even if a provision in the declaration conflicts with AS 34.08.470. Accordingly, section 2 clarifies that common interest communities formed before enactment of UCIOA are granted super-priority lien status in the same way that their post-UCIOA counterparts are under AS 34.08.470(b).

 

In response to this bill, AHFC is providing Servicers with additional guidelines.

Servicers are to follow the insurer or guarantor guidelines and requirements; no prior approval is needed, however, the Servicer must notify AHFC via email when a priority lien has been paid. The Servicer is responsible for ensuring all supporting documentation is available in the loan file.

When a demand is received from the HOA/COA, the Servicer is to issue a 10 day notice to the borrower to pay the outstanding dues immediately, so the delinquency can be cured. The Servicer should contact the borrower and encourage them to work out a payment plan with the association, if needed.

If no response is received from the borrower, the account is not on a payment plan with the association, and/or the account is not cured within 10 days from the date of the notice, the Servicer is to complete the following accordingly.

1.            The Servicer is to issue payment, according to AS 34.08.470, for the dues to protect our lien position; no prior approval is needed, however, the Servicer must notify AHFC via email when a priority lien has been paid. A demand is to be sent to the borrower after the priority lien has been cured. The demand should specify the default, the action required to cure, and a date, not less than 30 days from the date the notice is sent to the borrower, by which the default must be cured.

 

The Servicer is responsible for reviewing the Demand, including the Attorney Fees/Costs incurred, to ensure accuracy. Notification to AHFC should include a breakdown (Month/Year, monthly dues amount, late charges, etc.) of the amount being paid.

Where no payments have been made by the borrower since the 1st demand was paid, Servicers may proceed with one of the options below and will notify AHFC via email of the remedy chosen.

1.            Issue the payment according to AS 34.08.470, for the dues to protect our lien position; no prior approval is needed, however, the Servicer must notify AHFC via email when a priority lien has been paid.  The Servicer will establish an escrow account for the advanced payment issued and the monthly dues going forward. Servicer is to ensure that the borrower is provided with all appropriate notices and communication is made with the HOA/COA Attorney, should additional time be needed.

2.            Issue the payment as a non-reimbursable Servicer advance. The Servicer will be responsible for collection of advanced payment.

3.            Respond to the Demand that AHFC will not be issuing payment for the delinquent dues at this time. Servicer is to keep AHFC apprised of the status of the legal action taken by the Association.

1.            Issue the payment as a non-reimbursable Servicer advance. The Servicer will be responsible for collection of advanced payment.

2.            Respond to the Demand that AHFC will not be issuing payment for the delinquent dues at this time. Servicer is to keep AHFC apprised of the status of the legal action taken by the Association.

 

If the borrower pays at least 1 month of dues to the HOA/COA after a demand has been cured, the next Demand is to be considered the First Demand.