Not So Neighborly Associations Foreclosing On Homes

[keepinitreal]

Sold For A StealBeg For Mercy

And in 33 states, an HOA does not need to go before a judge to collect on the liens.

It's called nonjudicial foreclosure'Won't You Be My Neighbor'Closing Loopholes

Republican state Rep. Burt Solomons from North Texas has been trying in vain to pass HOA reform legislation. He says during state legislative hearings there was no shortage of outraged homeowners, but he acknowledges that the HOAs, their property management companies and their lawyers fought back effectively.

Solomons says HOA board members and advocates testify and say, "'We need the power to access and fine and foreclose, and we need the money. And we look for people in violation of the rules and restrictions that we put in place.'"

"And they drive around in golf carts looking for them," Solomons says.

In theory, HOAs are only supposed to foreclose for nonpayment of dues. But Solomons says that through a loophole in Texas law, in practice, HOAs can foreclose for nonpayment of HOA fines, too. Solomons watched with frustration last year as his reform bill died in the Senate.

Legal Recourse

http://www.npr.org/templates/story/story.php?storyId=128078864&ft=1&f=1001

[hughthehand]

Rule number one- never buy a house where you have to deal with condo nazis. Or home owner nazis.

[justbroke]

If you want to live in the nicer areas, it's almost impossible not to be in some sort of association. I live in something called a Community Development District (CDD) which is a special taxing authority. Think of it as an HOA on steroids. Most of the HOA stuff is rolled into the property taxes. It's a nice community but the reason it's nice is because the CDD paid for the infrastructure (roads, sewer, etc) and we -- as owners -- will continue to pay for about 12 more years... to payoff that infrastructure.

Yes, I'd rather live in unincorporated and non-CDD/non-HOA areas, but they are usually too far outside the distance I want to commute or get to anything.

But I agree that some HOAs are terrible.

[albacore44]

in california they get around proposition 13 by adding what is called a "Special assesment" which is a seperate line item on your tax bill. it used to be called Mello-Roos. not all new developments have it, sometimes the developer absorbes it into the cost of the house. we have a special assesment that goes to the school district. every parcel in my housing tract is assesed an additional $2500 a year in addition to the 1.25% tax on assesed value. I suspect these huge property taxes are what pushed many over the edge and into forclosure in my neighborhood.

[DaddyDavid]

What no ever mentions re: HOAs?

Every time they foreclose for past due fees, they are dropping the value of every other house in the subdivision, so they are really screwing themselves. My own peculiar little subdivision- when I foreclosed, the houses were worth $250,000 each, all 88 of them. Mine sold at auction for $110,000. Within six months, there were FOUR other houses listed for sale for under $150,000. I'd like to think I had something to do with causing a property value loss of, like 88 times $125,000? SCREW THEM AND THEIR HOA! ~ (Oh, yeah, and now two years later a casual search shows EIGHT current foreclosure situations there. LOVE it!)

[wipetheslate]

I feel bad for the guy, but why the heck did his wife stiff the HOA? I'm sure there wasn't a shortage of money for the payments.

[mijd]

I feel bad for the guy, but why the heck did his wife stiff the HOA? I'm sure there wasn't a shortage of money for the payments.

I feel bad too and in some instances it could be the realtors fault. Think of the reason people buy homes in a deed restricted community. They like the fact their neighbors won't have one or two cars on blocks in the front of the house...etc. Realtors tell perspective homeowners if the property they're interested has an HOA. Next if they want to make an offer on a house, the realtor is suppose to obtain a copy of the HOA bylaws and encourage the prospective homebuyers to read the bylaws carefully.
I recinded an offer after I found the house I was interested in was in a flood plain and the required flood insurance. This is a huge extra cost. I also discovered fences weren't allowed on the sides or front of the house. Since I owned a dog I couldn't let him run loose in my backyard without a fence.
Homeowners are always advised to pay HOA fees for the above situation. If the homeowner is short on cash, the HOA will usually work out something so the homeowner won't lose their home.

[ryan]

Believe it not, in some states like IL, HOA don;t have to foreclose.

They are granted the power by the state law to evict the Homeowner from their own house for non-payment of dues..... and rent the house out to to tenants..... and apply those rent payments to the amount of dues in arrears.

So, in those situations you still own your house, but can;t live in it!

[DGranny]

HOA QUESTION - I live in Cali, so, I'd appreciate a response from someone in Cali, if possible. I had not paid my 1st, HELOC nor HOA dues ($179 per mo.) since May of '09 (no car note, cc debt whatsoever ) due to a disability. I filed BK on 9-10-09, included the 1st, HELOC and unpaid HOA dues. I was discharged on 2-10-10. Did not reaffirm.

Submitted app to lender 3/10 for a loan mod, thinking they were considering me for a HAMP but it was obviously an in-house mod. That 'posponed' my TS date until 8/5/10. That loan mod. was ultimately denied by the 'investors' the first week of July. The lender then told me I was eligible for a HAMP mod, something I THOUGHT I was being considered for in March and what I specifically asked for in my 'hardship letter'. I submitted the initial paperwork for the HAMP within days, effectively postponing the TS date to 10/2/10. They have sent me more extensive paperwork that is due 9/2/10.

To finally get to the question about HOA dues. I have decided to not try to save my home, as it is $250,00 underwater, my 1st is $470,00 (with all the late fees and charges) and the HELOC is $95,000 and I still haven't paid HOA dues since May of '09. I have found a 'brand new' rental home that is actually larger than my current home (that I've owned since 12/05, BTW) and the rent will be $1650 per month, a lot less than the $3400 note I had been paying, and I'm going to move on and take advantage of my 'fresh start' . . .

In a conversation with the association, they said it doesn't matter that the HOA debt was discharged in the BK, that I still owe the dues from May '09 to current.

My thinking was that I owe for the dues incurred since my discharge date of 2/10/10. If I owe them retro to May of '09, then what's the benefit of EVER including HOA dues in a BK in the first place? Makes no sense to me.

Once I walk away, which will be 9/1/10, is the lender responsible for the HOA dues or can the 'association' still come after me? If the association gets a judgment against me in court, it doesn't matter to me, really -- I am a disabled, retired court reporter receiving SSD.

I would appreciate whoever might have some insight for me, and I greatly thank you in advance.

DGranny

[keepinitreal]

DGranny, I believe you do owe HOA dues that came due after you filed.
So, that would mean from 09/11/09 to the present. The debt for the dues you didn't pay before you filed bankruptcy were wiped out.

[mijd]

You're correct, laws concerning HOA's vary from state to state so someone from California needs to answer this question. I think it also has to do with your HOA bylaws. In our community concerning HOA fees, we lost out on foreclosures. Judgements never were for more than what was owed on the mortgages and even though the community was named on the foreclosure suit, payment to the 1st mortgage always came first. There never was a situation when I was president where we went after former owners for HOA fees owed in arrears. When the bank foreclosed that was pretty much it.

[helpmeout]

You're correct, laws concerning HOA's vary from state to state so someone from California needs to answer this question. I think it also has to do with your HOA bylaws. In our community concerning HOA fees, we lost out on foreclosures. Judgements never were for more than what was owed on the mortgages and even though the community was named on the foreclosure suit, payment to the 1st mortgage always came first. There never was a situation when I was president where we went after former owners for HOA fees owed in arrears. When the bank foreclosed that was pretty much it.

While laws may vary from state to state, this person does not owe HOA fees from before the BK filing. It is only owed from 9/11/09 on. The fees before that date were discharged in a bankruptcy action. And if the HOA attempts to collect any fees from before the date of filing, they will be in trouble with the BK court and can be sanctioned.

[Freddy03]

In FL it is almost impossible to not have a HOA. The first year when we bought our house we didn't pay our yearly HOA dues of $350 b/c the president couldn't prove what the money was being spent on. So my husband and I protested. Well we had to get an attorney b/c the HOA tried to foreclose for $350! I couldn't believe it!

[neverlearn]

HOA QUESTION - I live in Cali, so, I'd appreciate a response from someone in Cali, if possible. I had not paid my 1st, HELOC nor HOA dues ($179 per mo.) since May of '09 (no car note, cc debt whatsoever ) due to a disability. I filed BK on 9-10-09, included the 1st, HELOC and unpaid HOA dues. I was discharged on 2-10-10. Did not reaffirm.

Submitted app to lender 3/10 for a loan mod, thinking they were considering me for a HAMP but it was obviously an in-house mod. That 'posponed' my TS date until 8/5/10. That loan mod. was ultimately denied by the 'investors' the first week of July. The lender then told me I was eligible for a HAMP mod, something I THOUGHT I was being considered for in March and what I specifically asked for in my 'hardship letter'. I submitted the initial paperwork for the HAMP within days, effectively postponing the TS date to 10/2/10. They have sent me more extensive paperwork that is due 9/2/10.

To finally get to the question about HOA dues. I have decided to not try to save my home, as it is $250,00 underwater, my 1st is $470,00 (with all the late fees and charges) and the HELOC is $95,000 and I still haven't paid HOA dues since May of '09. I have found a 'brand new' rental home that is actually larger than my current home (that I've owned since 12/05, BTW) and the rent will be $1650 per month, a lot less than the $3400 note I had been paying, and I'm going to move on and take advantage of my 'fresh start' . . .

In a conversation with the association, they said it doesn't matter that the HOA debt was discharged in the BK, that I still owe the dues from May '09 to current.

My thinking was that I owe for the dues incurred since my discharge date of 2/10/10. If I owe them retro to May of '09, then what's the benefit of EVER including HOA dues in a BK in the first place? Makes no sense to me.

Once I walk away, which will be 9/1/10, is the lender responsible for the HOA dues or can the 'association' still come after me? If the association gets a judgment against me in court, it doesn't matter to me, really -- I am a disabled, retired court reporter receiving SSD.

I would appreciate whoever might have some insight for me, and I greatly thank you in advance.

DGranny

I live in So Cal and was on the board of my HOA twice. Yes the board can and will go after you for unpaid dues, filed in BK or not per our rules in Orange County CA.

I am not on our board anymore but right now our HOA is going after 14 owners who are more than 5 months behind and 3 of them did file BK. One owner moved out of state and our board decided they must pay anyway so off to the laywers off they went.

I would contact the board either though the management company or personal e-mail if your board has that. Try to set up a one to one meeting with them prior to the next meeting to discuss what is going on with your account.

We had many owners with financial problems and we tried to work with them any way we could, but many owners that just didn't pay and ignored letters were taken to court.

I will never again live with a HOA...

[confident]

Current advise from BK lawyer is that HOA can come after us on dues, even if they are listed on a CH7. We are liable for all dues until property foreclosure is final, whether originated by lender or by HOA (or both!).

Whether HOA will come after you or not, or in what manner, will depend on the community I suppose.