Condos hit by subprime shakeout

From the Washington Post:

Condos Feel the Mortgage Crunch

At Glen Waye Gardens Condominiums in Silver Spring, 21 owners are more than 30 days behind on their monthly condo fees. Two other owners have not paid since they bought their units, one in April 2005 and the other in September 2006. Both properties went into foreclosure.

The lost fees, which make up 5 percent of the association’s annual budget of $1.3 million, have pushed the condo board to dip into its reserve funds to fix the roof and replace a water heater.

“When those things go bad, you have to spend on them. You have no choice,” said Vicki Vergagni, president of the 214-unit community’s board. “We’ve had to use way too much of our reserves.”

In a sign that the turmoil in the subprime mortgage industry is affecting entire communities and not just individual homeowners, condominium association officers, property managers and real estate lawyers throughout the region say they are noticing more delinquencies in monthly fees.
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Many communities do not have large pots of money in reserve. It is worse for older communities because they tend to need more expensive capital improvements.
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Her building, on Old Columbia Pike, is old, and the elevators need fixing. The condo fees, which range from $275 to $400 per month, are crucial, she said. “We have to maintain the building because everyone loses if you don’t,” she said.