Two recent Wall Street Journal articles highlight a growing problem for homeowners associations and condominium associations.
One reports that Fannie Mae and Freddie Mac are tightening reserve expectations for condominium projects. The other reports a significant increase in HOA-related foreclosure filings as Associations face rising expenses and more owner delinquencies.
Those may sound like different stories. They are really parts of the same problem.
Association expenses are increasing, while homeowners are increasingly concerned about how much they are being asked to pay.
The Cost of Running a Community Is Going Up
Insurance is one obvious example. The Wall Street Journal reported that insurance premiums increased for 91% of community associations surveyed between 2024 and early 2025, with 17% reporting increases of more than 100%.
Repair and construction costs have also increased. At the same time, many communities are getting older. Roofs, roads, siding, elevators, stormwater systems, pools, and other common property eventually require significant repair or replacement.
For condominiums, reserve funding is also receiving greater scrutiny. Fannie Mae and Freddie Mac are moving toward a general expectation that at least 15% of annual assessment income be allocated to reserves, although an appropriate reserve study may support a different amount.
Those are lending standards, not North Carolina statutory requirements. But they still matter. If a condominium project does not meet applicable lending requirements, owners may have difficulty selling or refinancing their units.
Keeping Assessments Low Does Not Eliminate Expenses
Board members understandably want to keep assessments as low as possible. They pay them too.
But there is a difference between controlling expenses and keeping assessments artificially low.
If the insurance premium doubles, the Board cannot vote it back down. If the roof needs to be replaced, delaying the project does not make the roof younger. If roads, drainage systems, elevators, or other common property require repair, the obligation usually remains whether or not enough money has been budgeted.
Keeping assessments low today may simply mean a larger special assessment later.
Associations Have More Responsibilities Than Many Owners Realize
There is also a broader issue.
Modern developments often include substantial infrastructure and common property that must be maintained outside traditional local government operations.
Depending on the community, an Association may be responsible for private streets, stormwater facilities, landscaping, recreational amenities, lighting, common utilities, and other improvements. Condominium associations may also be responsible for roofs, exterior walls, structural components, elevators, and life-safety systems.
Some infrastructure is eventually accepted for public maintenance. Some is not.
Where the Association has the responsibility, however, someone has to pay for it. That is one of the basic purposes of mandatory assessments.
What If Owners Do Not Pay?
The second Wall Street Journal article reported that HOA-related foreclosure filings increased nearly 40% over a two-year period.
Foreclosure is a serious remedy, and Associations should follow their governing documents, collection policies, and applicable law carefully.
But unpaid assessments also create a problem for the rest of the community.
If an owner does not pay, the Association’s insurance, utility, landscaping, repair, and management bills do not decrease. Until the money is collected, the shortfall is effectively borne by the Association and the other owners.
That can become a significant issue when multiple owners are delinquent.
The Legislative Tension
These concerns are increasingly reaching state legislatures, including North Carolina. Proposed legislation in recent years has looked at providing owners with additional protections involving Association assessments, collections, and foreclosure remedies.
Those concerns deserve consideration.
But there is another question that should be part of the discussion: what happens if an Association cannot collect enough money to perform the obligations imposed on it?
Restricting assessments or collection remedies does not eliminate the underlying insurance premium, utility bill, road repair, roof replacement, or stormwater expense.
If the money is not available, maintenance may be delayed, reserves may be reduced, services may be cut, or owners may face a larger special assessment later.
The Bottom Line
Owners understandably want assessments to remain affordable. Boards should look for reasonable savings, scrutinize contracts, plan for future expenses, and avoid unnecessary spending.
But low assessments are not always evidence of good financial management.
The better question is whether the Association is collecting enough to meet its current obligations and reasonably anticipate future ones.
There is room for debate about how Associations raise and collect money. But the expenses themselves do not disappear.
Someone ultimately has to pay the bills.