HOA's Foreclosing on HomeownersA group of angry homeowners told a Texas House panel they’ve been threatened with huge fines and possible foreclosure for what they described as minor infractions of association rules.

A Houston couple may wind up having to pay more than $20,000 after a feud over a $50 ticket for having gray – instead of black – tape on exterior water lines, leaders of a property owners’ rights group told the House Business and Industry Committee.

“That was clearly, if it’s true, the most egregious thing we heard today,” said Rep. Gary Elkins, R-Houston, the panel’s vice chairman.

The issue of homeowner’s associations (HOAs) abusing their power to levy fees, penalties and to use foreclosure has come up for legislators since the 1990’s but in many ways the issue seems to be getting worse. Representative Gary Elkins has even called for lawmakers to explore whether foreclosure is only being used by HOAs to grab the homes of people who have built up a substantial amount of equity in their property.

Well the fact of the matter is that some unscrupulous HOAs could have the incentive to abuse their foreclosure power in this time of crisis.  So many first-time homeowners are already losing their homes to foreclosure leaving many planned communities struggling financially.

With many empty homes and HOA funds in the red, associations may feel tempted to use the threat of foreclosure to squeeze money out of homeowners with equity in their home. And while there is no definitive proof that HOAs are using foreclosure in this matter, it is not implausible that they could or would do so in the near future if the foreclosure crisis does not improve.