074 | How Fannie Mae & The Corporate Transparency Act is Affecting Your HOA | LIVE EPISODE

Join us on our LIVE as we talk about Fannie Mae, one most important names in the US housing market, and the Corporate Transparency Act. Both are now affecting your HOA in BIG ways.
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Fannie Mae...Who exactly are they? How did they come to play such a huge role in helping Americans buy homes? And why are they at the center of the future of HOAs? Tune in live, October 10 at 3pm Pacific on our HOA Insights YouTube channel to learn more! Robert, Julie, and Kevin will also be breaking down the Corporate Transparency Act and how that is directly affecting your HOA.

Corporate Transparency Act Notes:

Compliance deadline: Dec 31, 2024. Compliance is a two step process:

1. Boardmembers should each personally get their own FinCEN (Financial Crimes Enforcement Network) ID here (will need photo ID such as passport or Driver's License).
2. Gather Legal name of the association, Federal Tax #, and FinCEN IDs of all boardmembers and go here to e-file a BOIR (Beneficial Ownership Information) Report.

Episode Chapters: 

00:00 Corporate Transparency Act (CTA) Overview
06:45 Challenges and Compliance Strategies with the Corporate Transparency Act
14:19 Impact on Board Members and Associations with the Corporate Transparency Act
24:28 Fannie Mae and Freddie Mac Guidelines
33:42 Audience Questions and Closing Remarks

The views & opinions expressed in this program are those of the Hosts & Guests, intended to provide general education about the community association industry. The content is not intended to provide specific advice or recommendations for any individual or organization. Please seek advice from licensed professionals.

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Julie Adamen
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Chapters

• 0:00 Corporate Transparency Act (CTA) Overview
• 6:45 Challenges and Compliance Strategies with the Corporate Transparency Act
• 14:19 Impact on Board Members and Associations with the Corporate Transparency Act
• 24:28 Fannie Mae and HOA Eligibility
• 33:42 Audience Questions and Closing Remarks

Transcript

Kevin Davis: 0:00

Right now, in terms of Fannie Mae, there's a problem between Fannie Mae, Freddie Mac and an insurance company. Fannie Mae and Freddie Mac had guidelines that said this is what we need from your insurance provider. Now, what happens historically? They they were never as strict as they are. Today, they've gotten really strict and make sure that you comply with all their guidelines. So they have five guidelines, they make sure you apply to all five of them. Now the problem is that the insurance carrier does not care with Fannie Mae or Freddie Mac ones, they don't

Jennifer Johnson: 0:35

HOA insights, common sense for common areas exist to help all 2 million volunteer board members nationwide have the right information at the right time to make the right decisions for their future. This podcast is sponsored by four companies that care about board members, association, insights and marketplace. Association reserves, community financials and Kevin Davis Insurance Services, you'll find links to their websites and social media in the show notes.

Robert Nordlund: 1:06

Welcome again to Hoa insights, common sense, for common areas. I'm Robert Nordlund, and this is episode number 74 where I'm here live with regular co hosts Julie Adelman and hopefully Kevin Davis, in just a moment, and we'd like to keep this podcast current providing you with some valuable insights to help you confidently care for your association and confidently lead it fairly and responsibly into the future. At this time, in our industry, we are facing a significant government imposed deadline of December 31 for compliance with the corporate Transparency Act or CTA, requiring incorporated not for profit community associations to file a report online with the Financial Crimes Enforcement Network or FinCEN. And that legislation was indeed well intended, but it's probably a broad overreach for not for profit community associations, but it's still very real, and government requirements, we need to deal with it, so that'll be our first topic today. Another big deal is the new tool developed by Fannie Mae to help associations understand and address any necessary changes to their Fannie Mae eligibility following the tragic collapse of Chaplain tower South back in 2021 which was amazingly three years ago, if any may rightfully tightened up their eligibility requirements. Some associations got caught up in their ineligible or blacklist, making getting a mortgage for a home in the association rather difficult, and it was difficult to find out if the Association had moved to that ineligible list, and why? So that ineligible list should affect only a few of you, but if that's you, it's a big deal. Fortunately, we have some good news to share on that topic, but let's get right to the corporate Transparency Act or CTA. We're here to help. We're not your legal counsel, and we're not trying to sell you anything. We just want you to be well informed so you don't stumble or waste time going down any dead ends. So Julie, what's all this fuss about? Well,

Julie Adamen: 3:13

the corporate Transparency Act actually just just wanted to make clear that it doesn't apply just to HOAs, but HOAs condo associations did get sucked up into that. And so what it requires is that, and Robert, is it December 31 or January 31 December 31 five? Okay. I was okay anyway. But it requires that every single homeowners association, condo association, any sort of entity within our industry, they are required to, as a group, report on the status, like the name, the identification, and there's several other questions that are pretty invasive, especially for volunteers and homeowners association to upload to the government. So, I mean, you will have to, I don't know if they're accepting driver's licenses. They must be driver's license, passport, yeah, that kind of thing they want. And it seems to be a part of this was because they were all worried about money laundering, etc, etc. But as often happens at a ginormous government, one size does not fit all, but they think it does so to that and our national professional organization, community associations, Institute, Cai has actually filed suit against the government to block HOAs condo associations. I'm just gonna use ho community associations on that, because the gem term to block our industry and our our community associations for being included in that but as you know, excise us, excise us, but, but as you know, the wheels of justice turn very slowly, and I would seriously doubt if anything is going to happen until after this upcoming, looming deadline. So all homeowners associations are going to have to. Apply with this, and there's information on that, but there are, and I just want to let everybody know there are now third party companies that are doing this for homeowners associations, and by the way, it's not just every annual meeting. It's every time there's a change in even one board member. Somebody gets hit by a bus, or they decide they can't do this, or they move the whole board has to load all that stuff again. And they do have companies that will do that for you. It's something like the prices vary, but it's typically around $300 for the entire year. I find it interesting that to my knowledge, and this has been, I've been talking to some management company people. Obviously, this is a big deal. The lawyers are not particularly getting involved in this. They're, they're advising you to go to third party. So it's, it's a pretty big deal. And Robert, you want to add in on that, because I think it's off

Robert Nordlund: 5:56

on this. Yeah, well, there's, from a big picture point of view, association reserves. We're a corporation. We had to comply. Students, had to submit all our information. And I have a friend who I'm trustee for his estate, and I'm meeting him for dinner tonight, and I'm bringing my driver's license and all that kind of ID. It's just what we do in this country to be defined as who you are. We're going in front of a notary to get bunch of stuff done. So it's a government, as you said, trying to make sure that who's who, who's responsible for what. And I don't think there's a whole lot of money laundering in this country going on through the average community association. I think we got more down to earth problems like, what do we say? Pets and parking and yep, that's pharmacies, things like that, yep, which is why we have this podcast. But again, why we have this podcast is because, yes, the association needs to comply. And there's a lot of people that are nervous about giving this information out. Another from my point of view, is I have a son who's in the military, and I shares my name, and he has reminded me that there is no such thing as privacy anymore. You kind of need to let that go. I want to hold on to it as tight as I can. I don't want to let it loose out there, but we need to be responsible adults. And the biggest trick I learned about this corporate Transparency Act is it's kind of two levels. One is the organization needs to comply, and then the board members, Julie, as you suggested, need to be listed. And the key that I keep hearing in solutions is you as an individual can simply log on to the FinCEN website and deal directly with them, give your private information to the government, which they probably already know, your driver's license, your social security number, all that kind of stuff, and they give you a FinCEN ID, I don't know, seven digit, 12 digit number. Think of it like a social security number, another social security number for people involved in corporations, and then you give that to the CTA compliance officer at your association or their term manager, and they are not looking at your driver's license. They're not looking at anything else. They're just listing you as 1-234-567-8910, 1112, on Happy villas, Hoa, and that is a reasonable step of compliance. It gets really complicated. I wish Kevin was with us, because it gets complicated because he sells directors and officers liability Association. Now, what do you do, if you have, I don't want to say a stubborn, let's say a privacy sensitive board member who just doesn't want to comply. Do you have to kick him off the board or her off the board? Because that takes the association into non compliance. It gets kind of sticky when you get down into the weeds of a well intended board member who we're talking to here who just wants to help their association. Am I now? I've got now I've gone off on a rat.

Julie Adamen: 9:17

You know, Robert? The thing is that we should talk about, I do wish Kevin was on here. Hopefully he'll get on but there are penalties if you do not do this, and they are not small. I don't have the numbers in front of me. Do you have them? Robert?

Robert Nordlund: 9:29

Penalty of five, up to $5,000 for each violation. And so I'm not sure if that's per the association or per the individual, but it or per day, I don't know, but

Julie Adamen: 9:42

no, I think one of those is per day. I think it's 591 per day, not to exceed$10,000 and I believe there's potentially jail time.

Robert Nordlund: 9:51

Yeah, Kevin Judy and I have introduced the idea of the CTA and how it's a matter of registering the association and. And individual board members, they're outside third parties. It may be the sweet spot for each board member to individually get their FinCEN ID number and then simply give that to the CTA compliance officer at the association. I We want to hear from you. You just did a webinar on this subject last week or two weeks ago, yeah, a couple weeks ago, yes. Okay, yeah. So tell us. Tell us more. What do Association Board members need to know? All right, this

Kevin Davis: 10:29

is really very, very challenging, because the boards of directors right now, by January the first, have to give personal information to the CTA, which is part of the US, Department of Treasury, I need to, I think, the names, date of birth, addresses, unique identification number, photos, identification number. And you have to do it right. You have to get it done now. Cai is trying its best to get community associates excluded from it, and they may be able to do it, but if you don't, you have to do it by January the first, because there is a penalty of $500 per day, per day, yeah, per day, for$5 per day, yeah, little pentates of $10,000 and or up to 24 months in prison. Kevin,

Julie Adamen: 11:16

is that that's per that's per person, right? I mean, if that's the freaking individual, yeah, yep, yeah.

Kevin Davis: 11:21

It has to be, yeah, yeah, because the person who doesn't complete it, so, yeah. So $5 per day. So it's one, number one problem I've been hearing about, oh, it's, you know, for the past several months now, because the board members are not willing to do it. They don't want to comply. They want to get this kind of information out because of, you know, obvious reasons. So it is, it is a significant problem right now,

Robert Nordlund: 11:43

let's take a quick stop here. We're I think we've defined the problem, but it seems like a good time for a break, and that'll allow us commercial opportunity and for our audience to catch up if they have some questions

Paige Daniels: 11:57

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Robert Nordlund: 12:29

And we're back. Okay, so we define the problem. There's a December 31 deadline. We have to have this done by then. New set of rules starts on January one. There's some hope in the background, but knowing what we knew about the government and an election that we're midstream on and we hold out hope that that lawsuit from Cai will magically exempt us, or do we need to move forward and just comply? You

Kevin Davis: 12:57

know, I would say, Julie, is that you don't have a really choice right now. You have to comply. Because the problem if you don't Okay, this is a couple of problems here. Let's say that, you know, the odds of you being fine and going to jail, you you know, people says, Look, they're never going to catch me. It's not going to be a big deal. These things become a big deal when somebody, any association, said, finds out you haven't done it. That's where the problem comes into play once that once a unit owner or a board member finds out that they did it, you didn't do it, that's what he thinks creep a life of its own. And because all of a sudden, if I did it, I'm the board member and you didn't do it, guess what's going to happen? You know, we're going to have, we're going to be at odds with each other, and then next to you, you have to pull you tell him, Well, guess what I had to do and so, so didn't do it again. It creates a life of itself. So don't sit and say, well, just because, you know, there's fines and penalties, I never get caught. Nobody's going to do it. That's not your issue. Your issue is the people who do do it and doesn't like was you people who didn't do it. You agree with that? Julie, right.

Julie Adamen: 13:58

I absolutely would agree with that, I think. And, you know, getting to the bigger picture of our industry, well, look at this. How many homeowners associations are there? 345,000 something like that. Better, better part of 400,000 Yeah, better part of 400,000 That's right. And how many are small, self managed associations that don't even know about this, have no idea that this is going on, you know, they don't necessarily have gym counsel, or they don't have, you know, the ability to look this up. To me, it's just such a no win for the industry, and it's a real no win if you're trying to recruit new board members. I think this is going to put a group in that as hard enough as it is. But to reiterate what Kevin said, I've been talking to management company executives, and they are saying, Yeah, nobody is responding to the I mean, they've sent out all kinds of information, absolute crickets. And I as a professional, and it's like Kevin and Robert are as well. I mean, all three of us would say, you absolutely need to comply. I have a corporation. I. To comply there. I'm running for the board where I live. I'm gonna have to comply there. There's just I don't like it, but you know, you're such that we don't like to see well, if you are a TSA approved flyer, I mean, I fly a lot, so I can skip the having to take your shoes offline. They have everything on you already. And I don't like it, and they don't like it, but it's where we are. Yeah, let me

Kevin Davis: 15:23

give you another issue to that. It's interesting, because you know, what we're seeing now is people moving outside of California, move in different states. Okay? A lot of people California is moving into Texas or Idaho, Arizona, Nevada. And what they're doing, and what I hear is about they're bringing their California values.

Julie Adamen: 15:42

Okay? Sorry, everybody. I know.

Kevin Davis: 15:45

Guess what that means? In reality, that means you go to these board meetings, and you live in a community association, like in Idaho, right? You live in Idaho right now, and you go to a board meeting, you find out they're doing things that, wait a minute, we would not do it that way in California. And first thing we do is like, guess what for now, one you have to start passing these laws a bit better, or you have to discipline a little bit better. You have to pass these laws a little bit better. And what happens is, is that in Idaho, they'll say, No, we don't need to do that. They don't do this kind of stuff here. We don't sue there. So the problem is, is that they you don't live in a vacuum anymore. And you think just because you live in a town in Idaho or Arizona, Nevada, we don't do that kind of stuff there that the population is expanding, and people from California are used to obeying the rules and regulations. You know, they believe in enforcing the documents. They believe in the laws that are out there. And so when you go to a place and you all of a sudden say, well, guess what? You have to comply with CTA and that. Again, these are the issues that the board members have to understand. It's bigger than just saying complying with law certain things you have to do to stop yourself from having a bigger problem, and not so much as defines and penalties, but it does bring a problem to your association, because if you do do it, and you do comply with the law, guess what happens you Okay, yeah, you don't have, yeah, um, and if you, if you say this rule, I'm not going to apply, they guess what happened to the next one? And then the next one, and then legislation comes past. If you know your association not compliance with anything. Kevin,

Julie Adamen: 17:21

what's does the association itself, as an entity, have liability if the board members don't comply?

Kevin Davis: 17:27

Yes, they have a bigger one. Versus again, if you, if you do comply, and you get sued, you can say, Guess what, I'm just following the law. The Department of Treasury says, and I have to do it. I'm doing it. There's a lawsuit there. But guess what, I spent$5,000 in defense costs, and insurance will come in and pay for it. You have the insurance policy, I'll take care of you. As a board, we say we're not going to cover it. I mean, we're not going to comply at all. We have 2010 members, five nine members, and we refuse to do it collectively. Okay? Happens that you had that one person association. So it's your job to comply. I just like, it's your job to make sure the trash cans are taken in. And you know, after 48 hours, the same group of people, the same guy who says you're parking in business parking, same guy who says you just too big, the same guy gonna say, wait a minute, I'm going to force you to comply with CTA, and then once you take you, once you say, Take take you to court, what happens is, attorney will say, well, guess what? It's easy money for me. It goes you're not in compliance. So soon, as soon as you say to any attorney that I'm going I have a problem with the Board of Directors because they're not in compliance with CTA, any attorney would take it up, because, guess what? They make money out of it now because of something called prevailing party fees. So as soon as you do it, I'm a lawyer, I'm a jump on it, and now all of a sudden, lawyers are making money because you failed to comply with the CTA. Kevin,

Robert Nordlund: 18:56

I have mixed feelings on that. Number one is truly it. So it sounds like you're giving instructions for how people can sue the association. He didn't hear that from us. We want to do is encourage you how easy it is and how right it is to comply. I think that's the message that we want to get across.

Julie Adamen: 19:17

And the truth is, I mean people out there, if you know me, you know this really sticks in my car. However you have to, I'm going to have to comply, and I don't like it. I What can I tell you? But it is what it is. And it's not going to be easy for us as an industry, but as board members, we have no choice. And I, I'm going to do it, and I don't like it, but it is what it is. I

Kevin Davis: 19:41

mean, my example there is what happens, and what happened in the community association is that if you do your job you're supposed to do, if you're active in your fiduciary responsibility, and you get spewed, you don't care. I mean, you don't really don't care, as long as you have insurance to take care. Review, you back it up. The issue is, if you don't comply, whatever rules, whatever laws we have out there on the books, if you don't comply, that's where you get in trouble, and that's when that goes on a slope. So the easiest thing to do is comply, because at the end of the day, by giving those information, what have you what are the consequences? What have would have you lost?

Julie Adamen: 20:20

Well, I would also argue that you're not fulfilling your duties as a trustee if you don't comply. I have

Robert Nordlund: 20:25

grown comfortable with the idea that privacy is an illusion and you don't want to make a mountain out of a molehill. The government already knows all about us. As Julie said, I got my TSA qualification, I filed my taxes. I've got a clear designation going through the airport security. I've got a Passport, passport, yeah, it's what you do to live in this ordered society. And this time it's a pain, but it's just one of more, one more of those things that we do to live in this ordered society. Yeah, and usually the government takes really good care of us at this point in time, I think they may have overreached, but that's too bad. So sad that,

Julie Adamen: 21:07

yeah, but we're but as an industry, I want to let everyone know, as an industry, our professional organization is working on this on our behalf. Yes.

Jennifer Johnson: 21:16

Jen, all right. HOST, so we are covering CTA right now, so we have a couple of questions. Audience, please feel free to write your questions into the chat. All right, pop us over to Q and A. So we've got Jane asking, here we are an unincorporated association in Massachusetts. Does the law apply to us? That's

Robert Nordlund: 21:37

probably a better question for an attorney, but my understanding is from everything I've written, yes,

Julie Adamen: 21:43

it's going to be you still have that duty, yeah, but I but definitely seek counsel. Yes.

Kevin Davis: 21:48

You know that's one thing we have to say up front. We're not attorneys at all, so we can't answer any legal questions. However, they'll just be on the safe side. Yes, the answer is yes. This is a matter of just being safe than you are. You're better off doing than not doing. Yeah,

Jennifer Johnson: 22:03

fantastic. All right, we've got another question here from Hyde. How do I contact FinCEN as a board member?

Robert Nordlund: 22:11

I have links to the associations portal to register the association. I have links where board members can go to get their FinCEN ID Jen, can we put those in the show notes in? Yeah, we can definitely

Jennifer Johnson: 22:28

do that.

Robert Nordlund: 22:28

We'll do that. Okay.

Jennifer Johnson: 22:31

All right, fantastic. All right. Hosts, I'm going to pop you back into your talking time, and then we can start talking about some Fannie Mae questions.

Robert Nordlund: 22:39

I think we've pretty much covered most of our information. The hints have a CTA coordinator for the association to make sure it gets done. Individual board members register personally with a FinCEN so you don't have to give your passport or driver's license or that kind of stuff to someone else. Julie made it very clear, though, that there are professional organizations that handle this for you for just a few $100 if you want to go that direction, you don't want to touch it, you can do that. So that's a fantastic thing about our country, is that when there's a need, someone rises up to fill it. And one thing I read that I thought was a great idea was add having a FinCEN ID to your requirement for being a candidate for a board member, so you don't end up electing a board member who's to comply.

Julie Adamen: 23:31

That's a two edged sword. But I would have to agree, Robert, I'm going to say there's one thing I see, one question here in the chat. Someone asked if a manager files is there was no fee. I would say the managers typically will not file. The management company will not take that liability on, and like, just like your attorneys won't. So if your company does it and it's or your personal works for you directly, and you want them to do it and they do it, there you are. But no, I think you're gonna have to file your own I'd recommend it anyway. Yeah, okay, sorry,

Robert Nordlund: 24:05

no, no, no, this is all good stuff, and this is what we're here for. As Kevin said, we're not your legal counsel, but we want to provide some clarity to help you as you lead your associations forward. And this is a big deal, I want to make sure that we've encouraged you to comply, because I really doubt that the deadline is going to be dropped at the last minute, and you don't want to be waiting for that call from on what do we see in the movies and TV, the call from the Governor at 1130 at night? So that's that's not, yeah, let's get it done. Folks, okay, Fannie Mae, okay, there everyone, every Association, every condo association, should be Fannie Mae and Freddie Mac qualified. It's good for mortgages. It means that the people wanting to get them. Mortgage in your association get their preferred rates, and when you get Preferred rates, meaning low interest rates, that means the buyer has more margin to pay more for the unit. And so it basically does a good job of driving up home values, which everyone living in a community association likes. We all want our home values to appreciate. So being Fannie Mae and Freddie Mac approved is a good thing. There were some associations that got stuck in the Fannie Mae blacklist, and that was, it was almost a black hole. How did we get here? How do we get out? And the big announcement that was a think, about a month ago, was Fannie Mae announced that they have a new portal, and we will have a link to that in the show notes. Basically they have a new tool, and you need to be a manager or board member. It is going to ask you for your qualification, but it connects you right to Fannie Mae staff, and you can ask about your qualification situation, are you qualified or not qualified? And if not, it connects you to the staff so you can address your situation, so there's no more what do I do? That's a fantastic thing. Again, it should not affect most associations in the country. It should not affect very few associations on our podcast here today, but it's a great tool. It doesn't affect Freddie Mac. Freddie Mac serves a significantly smaller share of the market, and they do not have a black list. Clearly, there's approved and unapproved on Freddie Mac. Also they track Association status, but there's a very fewer there's a shorter list of triggers that move you into unapproved on Freddie Mac, so the issue has been Fannie Mae, they responded with a tool, and that is great news. So you can always log on and check your status, challenge your status if you do need to challenge it, and we'll have something like that in the show notes. Julie or Kevin, do you have any more to add on that?

Julie Adamen: 27:06

No. Pete covered that ones.

Unknown: 27:07

Yeah. That was good. That was good.

Robert Nordlund: 27:09

All right. Back to you know, we'll let this go a little bit longer. I think we're a little bit over time. But Fantastic, fantastic information. Are there any government credentials? Can you provide your military ID? Can you provide your we're

Julie Adamen: 27:26

your global entrance

Robert Nordlund: 27:29

number, your passport number, and I'm noting the answer is nope, yeah, it's FinCEN, because it's what is FinCEN. FinCEN is financial center for tracking bad guys. Yes,

Julie Adamen: 27:45

that's the technical term. Yeah,

Robert Nordlund: 27:47

the technical term is tracking bad guys. And community associations got caught up in this, and we have hope that this may be only this year, because the what was it, the one other organization was able to get its members. Oh, that

Julie Adamen: 28:04

was that. That was the Small Business Association, National Association of small businesses. Now, the thing about that is really interesting is that that was a very narrow ruling. You had to be a member of that organization to be exempt as of, I mean, as of like June of this year. Okay, so if you want to join, if you want to join, now go, I can get in on that. You can't for small businesses. So there is some chatter about if, if Cai is able to get this and get us accepted, you might have to be the association, might have to be a member of Cai, and we don't know that, but based on that other narrow ruling, it's always a possibility. It's a risk.

Robert Nordlund: 28:47

Yeah, it's a risk. And again, we don't want to be crossing the December 31 deadline double crossing your fingers that ca eyes. Stay of execution gets passed, and it applies to all associations. It may only apply to their what 40,000 50,000 association members across the country. So we have hope, but the hope is a small bubble, not a big bubble. That's

Julie Adamen: 29:15

the moment, yeah. Oh, and by the way, Robert, it's the Financial Crimes Enforcement Network.

Robert Nordlund: 29:19

Thank you, Jen.

Julie Adamen: 29:20

I want to thank Jan. No, I want to thank Jen for that. Thank you. Jen. Off screen, Jen,

Robert Nordlund: 29:26

our researcher, yes, okay,

Jennifer Johnson: 29:29

thank you. We have another question here, and then I think we need to start to wrap things up. All right. Lee is asking we are on the fanny blacklist due to roof insurance in Colorado not being available at 100% replacement costs.

Kevin Davis: 29:43

You know what? I I knew it was going to come up. I knew it. I kind of took a pay. Okay, right now, in terms of Fannie Mae, there's a problem between Fannie Mae, Freddie Mac and an insurance company. Fannie Mae and Freddie Mac had guidelines that said this. Is what we need from your insurance provider. Now what happens historically, they they were never as strict as they are. Today, they've gotten really strict and made sure that you comply with all their guidelines. So they have five guidelines, they make sure you apply to all five of them. Now the problem is that the insurance carrier does not care with Fannie Mae or Freddie Mac ones, they don't. So what happens is, is that where it's perfect example. What happened, what you just said, is that, what Fannie Mayer say is that you have to have something replacement cost. So if you have a $50,000 roof, you should get a$50,000 check back. Okay. But when insurance people are saying, wait a minute, if your roof is six, you know 15, over 15 years old is 16 years old, we're not gonna give you replacement costs. We'll give you actual cash value. So the actual cat's value of a 20 year old roof. That's not the same as replacing that roof. There you go. And that's the problem right now. That's one of the myth. That's one of many problems is that insurance companies are making decisions. Another thing to make a decision that you can't have high deductibles. And guess what happens is because these associations leak water, and so they'll put in a 1015, 25,000, deductible on water damage, and Freddie Mae and Freddie Mac saying, No, you can't do it. So right now, there is a huge problem with with Gene Fannie Mae and Freddie Mac and insurance, equal insurance, as you can know, the rates are going higher, and that means you're having less coverage and higher deductibles. They do not comply with Fannie Mae requirements. So we talk about higher deductibles and the lack of coverage and different coverage. That's the issue. It's not the higher they don't care about the premium. Being raised. They have a problem with you changing terms and conditions of the policy, as you know right now. You know, especially you live in California, in Florida, where there's wind and there's fires, the policy has changed, and it no longer are in compliance with Fannie Mae and Freddie Mac that's the issue right now, and what we're doing in the insurance industry is sitting down with Fannie Mae and Freddie Mac and saying, can we work together? Because insurance carriers cannot continue to write the insurance the way you want it written. And that's it in a nutshell. So I kind of hidden myself whenever you say anything else I'm going to talk about and but it popped up, yeah,

Robert Nordlund: 32:21

well, Kevin, isn't that the natural thing to happen? We've had two major uphill upheavals in this country. We had the collapse of Champlain tower south in 2021 or maybe three. We've had covid We've had the associated supply chain disruptions and cost increase that drove inflation. So we've got a lot of unsettled things. And when things unsettle, then, then you get this confusion where we have to make adjustments, and the adjustments haven't quite fit together yet.

Kevin Davis: 32:53

And the problem is, is that Freddie me and Freddie Mac and look at the same terms and conditions they did five or six years ago from an insurance point of view. Now, they may have changed in terms of reserve study or structural integrity, but insurance, we want these five things, and those five things have to be perfect all the time. And what happens is, as we in learning that insurance says we can't make money giving you those five things, we can make money give you two of those five things, but at five of the five things, and it's a big problem, and somebody brought it up. And if you have, if it's not, if you're not, experienced a problem today, you will experience a problem over the next year, because they will change. Insurance will continue to change. I mean, you got hurricanes in Florida, yeah, two back to back. You had North Carolina. Insurance companies look how much money they're going to lose, and as a result of losing that, they have to figure out, how are they going to make money? How they going to survive? How can they continue to be effective and continue their operations? So, good question.

Robert Nordlund: 33:51

Fantastic. Well, thank you to our audience for hanging with us. Kevin and Julie, it's time to wrap up our conversation today, Kevin, you've given us some closing comments, anything to add to that? Be patient.

Kevin Davis: 34:03

Be patient. Be patient. That's what it is. Now, as

Robert Nordlund: 34:07

you said, many times lower the temperature. We're in a time of disruption, but it's it's going to get better. Julie, any closing thoughts?

Julie Adamen: 34:15

Well, the only thing I want to say is to the board members out there and the potential board members, do I like it? No, but my recommendation, as a professional in the industry, also going to be a board member again, is you have to comply. So we're just going to have to bite the bullet and do it. I'm sorry, but it's the truth, so I want to see everyone doing it. Yeah,

Robert Nordlund: 34:37

I think, Peter, that's the bottom line here. Okay, to our audience, thank you for joining us today for another one of our special livestream episodes. We hope you learned some HOA insights from our discussion today that helps you bring some common sense to your common area. We look forward to having you join us for another great episode next week.

Jennifer Johnson: 34:56

You've been listening to Hoa insights common sense for common. Areas. You can listen to the show on our podcast website, hoe insights.org, or subscribe on any of the most popular podcast platforms. You can also watch the show on our YouTube channel, check the show notes for helpful links. If you like the show and want to support the work we do, you can do so in a number of ways. The most important thing that you can do is engage in the conversation, leave a question in the comments section on our YouTube videos. You can also email your questions or voice memos to podcast@reservestudy.com or leave us a voicemail at 805-203-3130, if you gain any insights from the show, please do us a HUGE favor by sharing the show with other board members that you know. You can also support us by supporting the brands that support this program. Please remember that the views and opinions expressed by the podcast do not constitute legal advice. It would to consolidate your own legal counsel before making any important decisions. Finally, this podcast was expertly mixed and mastered by stoke light. Video and marketing with stoke light on your team, you'll reach more customers with marketing expertise that inspires action. See the show notes to connect with stoke light you