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:
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.