Greedy HOAs Foreclose for Profit? Come On
By Brian P. McLean, Leahy.ps
For a superficial and one-sided take on homeowner associations, check out the following article at:
and the link to NPR:
http://www.npr.org/templates/story/story.php?storyId=128078864&ft=1&f=1001
The major theme of both is simple: homeowner associations are abusing their right to force the sale of homes for nonpayment of association assessments. The emphasis could easily have been turned around: owners not paying their assessments are causing associations to take drastic and desperate measures to pay their bills, harming the owners who remain, and leading to the destruction of entire neighborhoods.
As for board members bidding on units within their communities at public auctions, what’s the alternative? At least theoretically, the more competition in a public auction for bidding, the higher the fair market price. In a society based on fundamental notions of fairness, a secret insider sale, or attempts by the association to discourage other buyers, would be of much greater concern.
I agree that one should question the reasonableness and lack of humanity of foreclosing on homes owned by soldiers deployed overseas, or the necessity of foreclosing on a home over nonpayment of a few hundred dollars. Yet a more balanced and deeper analysis would take into consideration the financial distress facing the remaining owners who are still paying their assessments. When a significant number of owners stop paying their homeowner assessments, either out of necessity or for strategic reasons (e.g., the investment didn’t pan out), the remaining owners are left holding the bag, and bearing the legal expense of pursuing previous owners personally and judicial or non-judicial foreclosures.
If a nonjudicial foreclosure is the quickest, least expensive, and most expedient measure, a desperate and reasonable creditor would easily choose to conduct a nonjudicial foreclosure. It’s that simple.
In the real world, not the journalistic world where loss of ownership is equated with homelessness, the remaining owners, some of whom are on fixed incomes and have budgeted carefully their whole lives, often empty their bank accounts in an effort to keep the association on life support. When the pool of paying owners gets smaller, the remaining owners drown.
In addition to analysis of the profoundly disturbing effect that delinquencies are having on the remaining owners, at some point we hope to see some deeper analysis of how, during the go-go years, many banks, in reckless disregard of any semblance of due diligence, allowed virtually insolvent barbarians to borrow money for homes they couldn’t afford, enter gated communities, and passively pillage them when the predictable failures happened.
I’m facing such a situation, but in my case it’s due to an irrational ($16k for severely overpriced deck repairs — and most of the contractors that the hoa claimed that it requested bids from refused to bid for the work) special assessment. The HOA is obviously not doing a good job of planning, and has shown very little interest in working with the homeowners to make this affordable, so it’s burying some of us.
Without this special assessment, I’d actually be in decent shape, even though after taking a $20k pay cut this year, I’m a bit strapped — but still able to at least keep up. With the $16k special assessment, that’s no longer the case.
I am facing a similiar situation but in reverse. Out of the 10 owners, only 4 of us are paying dues, therefore we are in a situation where we might actually lose our condo because people do not pay their dues. Some are not paying because of finances, and some others because they simply don’t want to and are actively walking-away from their mortgages, not because they cannot pay but because they are tired of paying their mortgage. Now the rest of us are on the verge of losing our condos. If I could force them to foreclose, I would too. I just don’t have the finances to do it.
I do not believe HOAs are purposely abusing their right to foreclose for profit – this would quickly lead to legal issues for the HOA. I also do not support the idea that in these economic times, people are simply turning a blind eye to paying their dues. Again, that would lead to more problems than it is worth, such as liens. My situation is similar to those of the previous two comments – progressively worse financial situation combined with a HOA who has not had a good planning history.
I have a history of paying both assessments and dues on time, but lately have had to switch to a payment plan for my dues. My HOA, for reasons not disclosed, is reviewing my option to make payments this year. They have not disclosed why. Frankly, I have no option but to make payments. My husband lost his job and I have been on the same salary since 2004. The idea that we would simply skip our dues is lubricious.
However, this was written by an attorney from Kirkland. He would probably see someone like myself as one of those “barbarians” who shouldn’t have been allowed in a gated community in the first place.
That’s “ludicrous” not lubricious. Gotta love spell-check.
Well some of them do it!! Belive it or not – all HOA are that honest and ran that well.