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An Editorial
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THE "HOAusing" SLUMP?
Homeowner Association Owners are Prisoners of Perpetual Payouts
January 28, 2008
By
Ann Roth
(View author info)
Copyright Ann Roth
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Orange County, California - -------------------------------------------------
Sales of existing single-family homes drop in 2007 by largest amount in 25 years
By Associated Press
1/24/2008 10:03 AM
WASHINGTON -- Sales of existing homes fell in December, closing out a horrible year for housing in which sales of single-family homes plunged by the largest amount in 25 years. The median home price dropped for the entire year, the first time that has occurred in four decades.
The National Association of Realtors reported that sales of single-family homes and condominiums dropped by 2.2 percent in December to a seasonally adjusted annual rate of 4.89 million units.
For the year, sales of single-family homes were down by 13 percent, the biggest drop since a 17.7 percent plunge in 1982. The median price for a single-family home dropped 1.8 percent to $217,000......." Articles such as the one above are grim reminders of the painful and sad reality of the nightmare that the American dream of homeownership has become for many. To add insult to injury, real estate companies are actually offering foreclosure tours for interested buyers.
This article goes on for dozens more paragraphs. Not surprisingly, it never mentions HOMEOWNER ASSOCIATIONS as a possible contributing factor of today's housing slump - not even in the context of condos. This is irresponsible.
When people see a big "FORECLOSURE" sign posted on the front of a house, they imagine the poor homeowner being hunted down by the deed holding bank as a result of not being able to pay their mortgage. They don't usually view a foreclosure as being instigated by a handful of fellow neighbors. But in a homeowner association, that is reality.
FORECLOSURE BY HOMEOWNER ASSOCIATION (HOA) and the myriad of legal entanglements that can lead an unsuspecting homeowner into foreclosure just doesn't make headline news like it should. If the reality of the liabilities and risks of HOA laden housing were exposed on a national scale, the housing slump might get far worse. Or would it?
Maybe housing is in the slumps in part because people are ALREADY in dire financial straits due to unaffordable and unexpected HOA laden debt?
Maybe homeowners are staying put in single family traditional NON-HOA homes because they don't want to be "incarcerated" in an HOA fiefdom?
Maybe home buyers are wiser and telling their realtors "HOA NO-WAY!" and this slump in home sales is really a slump in HOA home sales?
The figures quoted in the above article are from the National Association of Realtors. Think about it - are they likely to be brutally truthful about the added financial risks and liabilities of HOA housing? Likely not - cuts into commissions. Since nearly all new homes are herded into HOA corporations, this could mean a huge pain in the paycheck.
TEN REASONS WHY HOMEOWNER ASSOCIATIONS CONTRIBUTE TO THE HOAusing SLUMP:
1. Ever increasing and unchecked HOA dues leaves homeowners stressing over whether or not they can afford to keep up with their dues. Such outrageous increases were not figured into the original loan application. Failure to pay these dues could result in a "Foreclosure by HOA".
2. Couple those increasing HOA dues with untimely increasing mortgage payments due to teaser rates expiring, and again, homeowner angst over ability to pay and now the added stress of which bill to pay first? Failure to pay either one could result in a foreclosure.
3. Add an unexpected special assessment of thousands of dollars to those increased HOA dues and increased mortgage payments and the financial burden and stress speaks for itself.
4. Can't afford to pay the higher HOA dues, bigger mortgage, OR outrageous special assessment? Add on interest and penalty for that!
5. Although you'd like to get a loan to restructure your debt, you may no longer qualify, or you found out that the HOA has put a lien on the house for your failure to pay the dues and assessments.
6. If you haven't received one already, expect a nasty letter from the HOA lawyers threatening to foreclose on your home. Add their fees to your increasing debt and decreasing savings.
7. If all of the above isn't enough, you receive notice that the HOA has been sued by a fellow homeowner. The complaint includes "Breach of Fiduciary Duty" for that massive special assessment the HOA board of neighbors caused. (See #3)
8. Let's put a little salt on the gaping wound in your wallet - add even MORE special assessments to fund the HOA litigation in addition to likely having to fund your own lawyer for advice.
9. Now you have to disclose this pending litigation. Because of that, your home won't sell, the value drops, and the lender won't lend because of the litigation ...... you are now officially deeply UPSIDE DOWN.
10. You can't sell the house to get out of this vicious cycle of HOA laden debt and you can't afford to pay it all so you give up. Before you know it, it's your home with the big red "FORECLOSURE" sign out front while 'Lookie Loonies' on foreclosure tours get happy over your distress.
"HOUSING SLUMP" or "HOAusing SLUMP"? Perhaps we will never know the actual stats on this subject, but it does cause one to pause and wonder if there has been an increase in HOA vs. Lender vs. HOA Lawyer disputes over who gets priority payoff when there isn't any equity left in the foreclosed home.
If the HOA or the HOA lawyers aren't able to collect on the foreclosed homeowner's debt, you can count on that becoming yet another special assessment facing the homeowners who are stuck in a litigious and out of control HOA - they are Prisoners of Perpetual Payouts. |
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