Academic journal article ABA Banking Journal

Legislative Success through Banker Engagement

Academic journal article ABA Banking Journal

Legislative Success through Banker Engagement

Article excerpt

FEW THINGS ARE more rewarding to association professionals than passing beneficial legislation through the joint efforts of our lobbyists and members. Banking associations across the country--including here in Tennessee--have the best lobbyists in the industry, bar none. They are smart, well-respected and engaged. Yet, regardless of their strengths, their successes are directly tied to the engagement of our members.

This past session, we built support for the approval of contentious legislation regarding condominium association liens thanks to the strong engagement of Tennessee bankers and the work of our great legislative team. As for some background, Tennessee was one of 22 states on the Federal Housing Finance Agency's "watch list" for having adopted a uniform law that grants "super priority" to homeowner association liens for unpaid dues. Foreclosures have since occurred in several states where a condo association foreclosed for just a few thousand dollars in delinquent dues and the courts ruled that the foreclosure sale, which did not bring nearly enough to satisfy the mortgage lien, extinguished by law the lenders' interest, leaving them with nothing.

Working with the TBA Bank Lawyers Committee and Government Relations Committee, our legislative team drafted legislation to protect condo owners and lenders. It allowed condo associations to foreclose for delinquent dues and receive six months of dues owed up to 1 percent of the original loan amount. However, it provided that a first mortgage would not be extinguished if that happened. And in the event a lender forecloses, a condo association would receive a "payment preference" of six months of delinquent dues up to 1 percent of the original loan amount.

While we believed this to be fair, the Community Associations Institute, the Washington-based trade association for HOAs, strongly disagreed. For them, this legislation was much more than just a Tennessee issue. If our legislation to remove their "super priority" status passed, they feared the 21 other states with similar laws might follow our lead.

To stop our legislation, CAI embarked on a campaign to mislead lawmakers and condo owners. …

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