Arizona HOAs foreclosing on a record number of homeowners: "Homeowners associations, the enforcers of neighborhood paint colors, holiday decorations and trash bins, are leading the latest surge in Phoenix-area foreclosures. HOAs are foreclosing on a record number of homeowners for as little as $1,200 in missed maintenance payments, according to an Arizona Republic investigation. And homeowners who thought only their mortgage lender could seize property are losing their houses at sheriff’s auctions, sometimes for just $100 more than they owe..Arizona allows an HOA to foreclose after a year of missed payments or a debt of $1200. But when HOAs add legal fees and interest to late payments, the debt can more than quadruple in a year."
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Yes, here we go again. For years after the 2007-08 crash in property values, HOAs and condo associations often decided not to foreclose because the units were underwater and there wouldn't be any equity left after the HOA foreclosure triggered the mortgagee (bank) to get into the act and take what was owed on the mortgage. Some states have a limited "super-priority lien" for some amount of overdue assessments, but the big payoffs, including hefty attorney fees, were not there because you can't get blood from a turnip. But now, housing values have come back in many markets, so HOAs are back in the foreclosure business.
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"Arizona HOAs foreclosing on a record number of homeowners"
Inconceivable! Unpossible!
The self-appointed advocates of H.O.A. reform and champions of homeowner rights assure us that they're Making a Difference ™ and Having an Impact ™. There's no way the C.A.I. -- and the $85 billion per year industry it represents -- can withstand the might of their blogs and Facebook pages and other forms of cyber-preaching to the choir.
> Evan McKenzie wrote… “For years after the 2007-08 crash in property values, HOAs and condo associations often decided not to foreclose” ... “the big payoffs, including hefty attorney fees, were not there because you can't get blood from a turnip”
Your claim that the H.O.A. industry was somehow reluctant to squeeze homeowners during the Great Recession is ludicrous.
Even before the Great Recession, there was evidence that most H.O.A. foreclosure filings were in poorer neighborhoods ( “7 out of 8 filings occur where median home value is less than $100,000”, hoadata.org ).
In 2010, NPR reported that
“With the recession, foreclosure filings for delinquent HOA assessments in Texas have increased from about 1 percent of all home foreclosures to more than 10 percent currently, according to the industry.” (“All Things Considered”. 06/29/2010).
Donna Berger Esq. advised H.O.A corporations to “Be Aggressive with your foreclosure actions” (this blog, 04/03/2010):
“As a Managing Shareholder of Katzman Garfinkel & Berger (KG&B), I have witnessed the dramatic effect that the downturn in the economy has dealt many communities here in South Florida and across the state.”
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“History has taught us, however, that there are always those who survive and even thrive in tough times! My team of community association attorneys and I“
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“Rethink your traditional collection policy in light of today’s economic realities.”
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“Be aggressive with your foreclosure actions.” (“Time To Tighten Up Your Current Collection Policy”. 04/01/2010. emphasis added)
Ms. Berger also suggested that:
“The first thing you want to do is to make sure that your governing documents provide you with all the right tools to deal with your foreclosure and other issues.”
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“1. Adding late fees (if you don’t already have them) and increasing the amounts you can charge for late fees and interest to the ‘highest amount permitted by law’.”
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“6. Add an acceleration of payments clause in the event installments are not timely paid. This gives the association a larger hammer to collect for the whole year which obviously benefits cash flow“ (“Spend $$’s to Recoup More $$’s” 04/02/2010. emphasis added).
On their “Collections/Foreclosures” web page, H.O.A. law firm HindmanSanchez proudly advertised that
“With our long experience in association law, we understand the mind-set of delinquent homeowners. We know that when it’s time to pay the bills, assessments are often low on the priority list. Our goal is to move assessments to the top of the priority list and to impress upon owners that paying assessments is critical to keeping their home.”
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“We have developed successful alternatives when traditional collection methods fail, including the use of foreclosures and receiverships. By taking a proactive, aggressive approach, your association can quickly recover the assessments you are owed.“
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“Colorado has one of the highest foreclosure rates in the nation. HOALiensFor Sale is a service we offer which will benefit your association and its bottom line.” (archive, 02/15/2011).
Your friend Shu Bartholomew often observed that the C.A.I. has created a “recession proof industry” (her words) for H.O.A. management companies and H.O.A. law firms. People need a place to live, and they often have little choice but to live in H.O.A.-burdened housing.
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