ASSOCIATIONS PUSH FOR FORECLOSURE INSTEAD OF PRIORITY OF THEIR LIEN

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EDITOR’S NOTE: I wonder why the homeowner associations have not aspired to have their lien declared as having priority over the defective mortgages — a move that would guarantee collect-ability and which would save the homeowner from foreclosure.

Of course that would mean fewer foreclosure sales, fewer short-sales, and fewer re-sales. Realtors probably would not like that.

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With homeowners’ associations in a financial pinch, the amount of lawsuits filed to force foreclosures is on the rise, according to an article on Bloomberg’s website.

Homeowners’ associations have begun taking banks to court after finding that foreclosure delays have enabled homeowners to stay in their residences for months, even years, without paying association fees. The lack of incoming fees cause associations to lose tens of thousands of dollars in revenue, according to Bloomberg.

“About 50 percent of our members said the housing crisis and economic downturn have had a severe or serious impact on their association,” said Frank Rathbun, spokesman for the Community Associations Institute, a trade group with about 30,000 members.

The fees associations charge go toward community upkeep in places such as parking lots, roofs, landscaping and trash removal.

About one in five Americans live in a house with homeowner or condo fees, Rathbun told Bloomberg. Many people residing in buildings with homeowner or condo associations also live in states with high foreclosure rates, such as Florida, Nevada, California and Arizona.

According to Steven Parker, president of Red Rock Financial Services, delinquent homeowners in Nevada, which has the highest foreclosure ratings of any state, owe associations about $150 million in back fees.

John Rickel, chief executive officer of Association Dues Assurance Corp., told Bloomberg that banks often attempt to delay foreclosures because of the associated dues, property taxes and occupancy costs.

In Florida, for example, 14 percent of homes have a foreclosure notice, and the average delinquent homeowner has not made a payment in 719 days.

Homeowners’ associations desperate for cash will often have to push banks to foreclose on delinquent homeowners.

“Banks have been slow catching up to reality,” said Kelly Richardson, an attorney who specializes in homeowner association law, in the Bloomberg article. “When pushed, they’ll step up to the plate, but you have to push them.”

 

6 Responses

  1. You get foreclosure filing from homeowner associations for the same reason you get them from condo boards: the people in charge are grumpy old people who use their positions on the Board to wreak havoc on people they do not like. “It’s personal.”

    If a property is underwater, then excepting the portion that is first-priority, typically six months of fees, the association charges are and remain behind the mortgage and are uncollectable. Instead of rational analysis, these old people fall victim to smooth-talking foreclosure mills who approach them with the spiel: “Let us file a foreclosure, then the costs will be tacked onto the property charges and your enemy homeowner will have to pay them all.” What the Board people do not realize is that they have to “eat it” up front, and “maybe” there is collection on the other end. And if not, then the Association treasury takes a huge hit.

    The dynamics of the Boards of these Associations are those of vindictive behavior, in which personal animosity becomes the motivator. This is well appreciated by foreclosure law firms and is deliberately milked for signing up the Board as a client. After being well paid by the Board, the firm says, “Well, we did what we could for you,” and walks. The fees are now tacked onto an underwater property. I know of one case where $128,000 in fees were tacked onto a $127 claim. the condo association had to make two separate special assessments of $5,000 each to cover the fees. Vindictiveness has no limits, when the Boar is spending other people’s money.

  2. Just what we need, another faction pushing us out of our homes for money.

  3. “Average delinquent homeowner”–I don’t care for that phrase. It’s our financial system that is delinquent.

  4. Homeowners Associations are only thinking of themselves, not what’s good for the community as a whole! It does not matter whether a bank forecloses faster, the property will remain empty and collect dirt instead of fees when not occupied, the banks will not pay the dues, and the evicted home owner should not have to.

    A friend of mine was evicted out of her condo by B of A, while under the pretense of a modification, she never knew what hit her at age 81. after her son moved her to another residence, the old association knowing that her condo was foreclosed on, they still sent her bills for the fee on a monthly basis, expecting her to pay even though she no longer lived there. The funny thing is, when she lived there whether or not she paid her mortgage, she made sure the association fees were paid on time, go figure.

  5. And the plot thickens……..
    National Association of Realtors has been over-reporting existing home sales for FIVE YEARS, not just the last year. More evidence of the propaganda being fed to us by the perpetrators of this fraud.

  6. It’s been my experience that law firms are retained by homeowner associations mainly on one criteria , price… The ones I have known are “one trick ponies” , they only live to send a bill with a jacked up collection fee… They aren’t real lawyers and they wouldn’t know a bad title if it bit them in the ass.

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