Fannie Mae required to Pay Condo ALL Delinquent Assessments and Fees

After Loss in Appellate Court where Lender Did Not Act Properly
Significant and Historic Victory for Condos

Miami, Florida (May 15, 2014) The Florida Third District Court of Appeal recently ruled in favor of the Alden Hotel Condominium Association against Federal National Mortgage Association (Fannie Mae) requiring Fannie Mae to pay the association nearly $100,000 plus attorneys fees and costs, following an appeal during a non jury trial.

In Florida, the condominium and homeowner association statutes provide a Safe Harbor to the amount of delinquent assessments that can be collected for the period before a first mortgage holder takes title. According to court documents, Fannie Mae had taken title to one of the Alden Hotel units through bank foreclosure and refused to pay the past-due assessments asserting a position that they always get safe harbor per statute.
The Alden Condominium Hotel engaged Association Financial Services had been servicing the Accounts Receivable needs including, but not limited to, collections since March 2010. After Fannie Mae purchased the unit in question, they had requested a payoff letter. The specialists at Association Financial Services noticed that something was wrong and conducted a detailed review of the relevant documents. According to Jeffrey Oshinsky Esq. General Counsel at Association Financial Services ““There was something wrong. Although Fannie Mae claimed to have foreclosed on this property, careful review of the pertinent documents revealed that they purchased the property at auction as a third party bidder, rendering them ineligible for safe harbor protection.”
With the Association’s Board’s consent and participation in the process, Association Financial Services brought in the community association law firm of PeytonBolin to represent the association in the litigation needed to protect the Alden’s rights to collect delinquent amounts due from Fannie Mae.
PeytonBolin was able to show that the evidence provided by Fannie Mae was unreliable and did not prove they ever had an interest in the loan. At the 11th Judicial Circuit trial, the Honorable Judge Eig found that Fannie Mae did not prove that it was the first mortgagee and therefore, the Association was entitled to collect on all assessments, interest, administrative late fees, and collection costs accruing from 2007.
Unsatisfied and unrelenting, the larger institution known as Fannie Mae appealed to the 3rd District Court of Appeals. “In this case, the trial court did what it was required to do. It provided factual findings and it made credibility determinations. We leave it to the fact finder who did his duty, he made those determinations.” stated Michael Mayer, co-counsel for PeytonBolin on behalf of Alden Hotel Condominium Association at oral arguments heard on March 4, 2014 in front of the Appellate Court.
On April 2, 2014, the 3rd DCA issued a decision favoring The Alden Condominium Association and affirming Judge Eig’s ruling. Fannie Mae was ordered to pay the entire ledger balance of $98,284.13 plus attorney’s fees and costs.
The key lesson for ALL associations is to make sure that they have the following elements in their collection solution:
1. Specialists who know what to look for in order to identify deficiencies that ineligible banks or 3rd party bidders try to hide when the unit changes ownership.
2. Experts in maintaining credible ledgers and related records needed for successful litigation, and the capacity to serve as capable witnesses to support the association’s claims.
3. Teamwork between records custodians and legal representation for community associations.
This is a victory for The Alden Hotel Condominium Association and Associations everywhere.

“We are tired of Associations giving into big banks and institutions like Fannie Mae because they think they can’t win against the giants. We are proud to have fought and won the good fight on behalf of associations everywhere“ said Mauri Peyton, Founding Partner for PeytonBolin and Co-Counsel on the case. “We appreciate the collaborative and instrumental role the team at AFS provided in our successful prosecution to collect on behalf of The Alden” continued Mr. Peyton.

“I was very happy to be a part of this case and support the Alden Condominium in this landmark and heroic collection effort. As always, working with strong attorneys like those at PeytonBolin makes it easier to do our job when we know we have counselors who can help support the fights when they are properly needed” said Michael Jenner, Operations Manager for Association Financial Services.