Quote:
Originally Posted by Al_2009  Hi,
After fighting (so far successfully) to get out of foreclosure and modify my mortgage, I got a notice today from my HOA that THEY intend to foreclose on my property because of $5000 in back HOA fees.
I plan on contacting them Monday in hope of working out a payment plan.
BUT -- can they actually do that? More to the point, I'm upside down on my mortgage by at least $100k. If they do try to foreclose, do they get paid before or after the banks and property taxes? They just filed a property lien last week, according to the notice.
Thanks! |
Al2009,
HOA dues is a huge responsibility, people should think twice before buying a home with HOA and Mello Roose Dues. These dues increased every year and seldom, their agent, or the seller inform th buyer of the consequences of having these dues. There are HOA dues that start at a low cost of $32 a month but after 5 years the HOA raised it to $200 a month some higher. Dues must be paid for streetlights, pool maintenance, landscaping, etc. When dues are not paid, the entire community suffers and this affected home sales and property values. At the very least, a diligent Board will put a lien on the property and this will have to be paid when the property is sold.
The remedy for default on HOA fees should be set forth in the document that created the association. You should review your copy. Generally, the HOA can obtain a court judgment and record a lien against your property. The amount due will increase with costs and interest until it is paid. If the amount becomes high enough the HOA may force a sale. However, that would be an expensive process.
When homes go into foreclosure, the owners are often far more worried about the mortgage payment than anything else. There are numerous costs involved with owning a house, though, and all of these need to be paid before and during the foreclosure. If they are not paid, and the homeowners are able to stop foreclosure before losing the home, they can quickly find themselves back in the same situation, in danger of being sued again for delinquent property taxes, homeowners association fees, or find themselves owning an uninsured home. Even worse, the lender may impose an escrow account or forced insurance on the property. Thus, it is important for foreclosure victims to keep on top of as many of the payments relating to the house as they can.
If property taxes are paid through the escrow account, then the lender will pay the property taxes as they come due. Of course, the amounts paid for taxes will be added to the total payoff needed to sell the house or refinance to stop foreclosure, but the taxes will be paid to the county on time. The bank will not let the house go into a property tax foreclosure while they are pursuing their own foreclosure, and this gives them the opportunity to add more interest and charges to the total payoff, as they can stack up more junk fees on a negative escrow balance.
After the property taxes are paid off through the sheriff sale, the first mortgage will be paid off with as much of the proceeds as are left. If there is not enough to pay the first mortgage completely, then the Homeowners Association (HOA) and other lienholders will simply get nothing.
Now, the HOA could try to sue the homeowners after the foreclosure for the amount of fees that were owed up to the date that they were no longer the owner of the house. It may not be worth the time or effort for them to try to sue and obtain a judgment, though, especially as it is commonly known that most foreclosure victims do not have the extra resources to pay a deficiency judgment and little motivation to work out a payment plan or other arrangements. It is more likely the HOA will simply give up on collecting the fees, as they will not be able to cover the costs of the lawsuit.
Most Association Boards will work with an owner if they need to set up payments due to a job loss, divorce, or other life changing event. It is better to meet this head on rather than stick one's head in the sand and hope it goes away. Make sure you review your HOA documents.
Hope this helps.
Thanks,
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