By Deborah Goonan, Independent American Communities
I have many contacts across the country who have been advocates for homeowners for decades. They have been writing to their state and federal elected officials for many years about the injustices of the HOA foreclosure process:
- Past due assessments of a few hundred dollars quickly balloon to thousands of dollars in a matter of 60-90 days, and most of that balance represents attorney fees
- Many Associations fail to provide adequate notice of default, or will not provide an itemized statement to the homeowner
- While some associations arrange payment plans for owners, others do not
- Those that do offer payment plans often tack on high interest rates and legal collection costs, making it impossible for the homeowner to ever pay off the debt
- About half of the states in the US have non-judicial foreclosure, meaning that the HOA can proceed directly to a foreclosure auction without a ruling from a judge
- Homes without mortgage liens or with high levels of equity seem to be prime targets for HOA foreclosure
- HOAs may issue fines for violations of restrictive covenants, and then apply regular assessment payments made by the owner to the fines first, automatically creating assessment delinquency and the threat of lien and foreclosure
- An HOA foreclosure can – and often does – occur for relatively small dollar amounts, with respect to the value of the home
No one knows how many homeowners have lost their homes to foreclosure by the HOA rather than their mortgage lender. No national or state agency has been tracking HOA foreclosures. But none of us who follow these issues can conclude that HOA foreclosure is as “rare” an occurrence as the HOA industry trade groups would have the public believe.
While a few property owners chose to strategically walk away and abandon their homes when the real estate market crashed, many others were blindsided when their HOA foreclosed on their homes.
A few weeks ago, I featured one news report of a family from Port Orange, Florida. Their HOA, Water’s Edge, foreclosed on the Annis family home over $1900 in past due assessments. Water’s Edge HOA filed a lien of $5,000 and then sold the family’s home for $175,000. Katelyn Annis and her husband owned the home outright, and it is reportedly worth up to $300,000. The Annis’ story garnered the attention of local news media, particularly Action 9 News.
Well, today I am passing along an update. The buyer at the HOA foreclosure auction is now willing to sell back the house to the owners for $15,000. And the Annis family will also have to repay their HOA $5000 to remove the lien. While that’s still a steep price to pay for a debt of less than $2,000, it is a preferable option to losing $100,000 in equity and being left homeless.
But it all could have been avoided had the HOA worked with the homeowners. And consumer and homeowner advocates across the country will argue that there needs to be a cap on interest, attorney fees, and collection costs, as well as realistic and fair payment plans that make it possible for homeowners to get back on track.
Action 9 helps local family get their home back after HOA foreclosure