The number of foreclosures filed by homeowner associations (HOAs) and home equity lenders has risen dramatically this year. Already 350 Dallas-Fort Worth area homes are facing foreclosure sale in May because the owners owe money to homeowners associations or home equity lenders.
“Especially from the homeowners associations, we have seen significant increases in postings,” said Roddy, whose firm tracks foreclosures in more than a dozen Texas counties. “Historically, these HOA postings have been very low – five years ago, you rarely saw one.”
And while foreclosures filed by HOAs and equity home lenders make up less than 10 percent of the foreclosure filings in North Texas, many analysts predict that these types of foreclosures will continue to increase-especially HOA foreclosures.
“This is going on statewide,” said Beanie Adolph of Texas Homeowners for HOA Reform Inc. “The horrible truth about HOA foreclosures is that the HOA has no investment or expenditure in the home. This is debt created out of thin air – HOA fines, charges, attorney fees.”
In the past, HOAs did not typically pursue foreclosure against homeowners who were delinquent on their dues; but now due to economic hard times many are using foreclosure and actually auctioning off the homes to get payment for not just the past due fees; but also fines, charges and attorney fees. Because a foreclosure by an HOA doesn’t include the original debt on the property, anyone purchasing as HOA foreclosure must negotiate some type of payment with the original mortgage lender.
If a debtor has been hit by an HOA foreclosure, they should know that they have six months to reclaim their property by paying the HOA fees within that six month period. They can also file bankruptcy to stop the foreclosure.