"Upside Down" is a term used to describe owners who owe more on their property than the property is worth. This happens during down-turns in the economy and causes may homeowners to walk away from their properties or declare bankruptcy.
If the owner "walks away" from the property, he/she continues to live in the property but stops paying the lender (and stops paying the association as well). Both the bank and the association generally initiate foreclosure proceedings against the owner. However, banks are often slow to foreclose because they don't want the property in their inventory. As a result, the association should pursue its own collection efforts without counting on the bank. Also, boards should consider budgeting for bad debt
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