Homeowners associations foreclose on banks | The Courier-Journal | courier-journal.com
I have posted articles about this practice before. It highlights the economic challenges facing many HOAs and condo associations. Banks are the 800 pound gorilla of this economy, it seems. They can break laws and instead of people going to jail, the taxpayers are forced to shovel money into their gaping maws. It is obvious that this practice of stiffing associations out of assessments on bank-owned properties is a deliberate strategy to avoid their financial obligations. We are constantly hearing all this whining and condemnation of "strategic defaults," but what do you call this? Thanks to Mika, Fred Fischer, and the others who sent this link.
3 comments:
Strategic management of obligations associated with non performing loans.
I hope that more HOAs foreclose on banks so that banks will stop lending for homes burdened by HOAs, condos, and "planned communities". Of course as governments impose HOAs and bail out the banks, the homeowner will get hosed coming and going. "Community corporations" are not just divesting the former property owners of their property. You know that quip that the HOA promoters like to use to justify foreclosure against homeowners - "they're taking the equity out of the other homeowners pockets". Well when you have bailouts of this magnitude on banks with loans secured by HOA properties (that didn't preserve value for anyone), the REST OF THE COUNTRY ends up footing the bill - even those people whose properties are not burdened by HOAs are paying the price.
HOAs are black holes sucking money from a lot more than just the victim former homeowners. They are a vehicle that contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy; and they create other large societal costs for example by flooding the court dockets with frivolous lawsuits, imposing additional health care costs for the victims which are passed on to all, harming businesses by negatively affecting victim homeowner workers' productivity, among many other negatives.
It seemed that there was previously an unspoken agreement or point of ignorance about these bank owned properties. I've seen boards actually take the position that while the bank owned the property no assessments were due and that they didn't need to send ballots or communications to banks.
Now that this HOA industry has become so greedy, the attorney fee scalping is getting some attention and the management company "priority of payment scam" is rendering all "units" in many condominium complexes wholly unmarketable. (This is the scam where management company policies are designed to create artificial delinquencies in order to enable the management company to extort late fees and other junk fees from homeowners).
Hopefully getting a little light shown on the community corporation industry will result in decreased lending and decreased federal mandates for these black holes.
There is a decent paper that was published a few years ago entitled "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis", by Brent White, University of Arizona (2010).
Your own federal government and the banks have used shame, fear, and other tactics to herd homeowners like cattle. These emotional effects are actively cultivated by the government and other social control agents to cause homeowners to ignore market and legal norms. The norms governing the homeowners stand in sharp contrast to the norms governing lenders which have no need for nor obligation to "morality" or "social responsibiity".
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