Tenants caught in quagmire of homeowners association foreclosures | Tampa Bay Times: During the recession, many Floridians fell behind on their payments not only to the banks but also to their homeowners associations. The HOAs, many of them struggling to keep up with maintenance and other expenses, foreclosed on thousands of homes to limit their losses. That created a lucrative opportunity for investors.
Here's how it works: After the homeowners association forecloses, the property is put up for auction. The property title goes to the highest bidder, usually for the amount of fees owed, often just a few thousand dollars. The winning bidders don't really own the houses but can rent them out until the banks finally foreclose and take the homes. The whole process is enabled by the glacially slow Florida foreclosure system, which takes an average of 935 days from start to finish.
While the investors rake in big profits, many of the homes languish in disrepair, causing more problems for the HOAs and discomfort for the tenants.
This story illustrates a major downside of allowing HOAs for foreclose for delinquent assessment sums orders of magnitude below the typical mortgage arrearage. Here it works like the pitch of those real estate infomercials: get in for little money and make big profits.