Multi-Family Homes Have Higher Percentage of Defaults on Mortgages
In a Working Paper published by the Federal Reserve Bank of Boston, discussing the sub-prime market and its impact on home ownership, it found that condominiums and other multi-family homes have a 67-86% higher default probability than owners of single family homes. And if the condominium was purchased under a mortgage from a sub-prime lender, it is estimated that the default possibility is increased by 715%! This means that multi-family associations (condominiums and townhomes) should carefully budget for bad debt in the next few years. However, it is not all bad news…the paper also found that condominiums are more likely to sell compared to townhomes and single family homes so the chances of recovery on a lien is greater. So, make sure you are recording liens and carefully watching for-sale signs and listings.
Click here for a full copy of the Working Paper.Now this was certainly a shock! How about a report on the financial impact of uncollected assessments due to foreclosures and bankruptcies?