By STEVE BROWN / The
A growing number of
About 350 Dallas-Fort Worth area homes are facing a forced sale because the owners owe money to homeowners associations or home equity loan holders, local foreclosure filings show.
That accounts for less than 10 percent of the total foreclosure postings for May in the four-county area, but the number of these filings is going up, said George Roddy, president of Addison-based Foreclosure Listing Service.
"Especially from the homeowners associations, we have seen significant increases in postings," said Roddy, whose firm tracks foreclosures in more than a dozen
But with thousands of North Texans losing jobs and income, some are falling behind on homeowners association dues.
The HOA debts generally include unpaid dues, fines or special assessments.
"In the past, most of them [the HOAs] sat on it and tried to collect later," Roddy said. "But now they are selling some at auction."
A foreclosure by a homeowners association doesn't include the original debt on the property, so anyone who bought the foreclosed property would still have to negotiate to pay the original mortgage. And the property owner has six months after a forced sale to redeem ownership by paying the HOA debt, Roddy said.
One resident's story
Allen resident Johnny Harris is one of more than 100 D-FW residents who had his home posted for forced sale next month by his HOA after he fell behind on fee payments.
Harris said he owed about $1,000 to the Custer Hill (Allen) Homeowners' Association Inc. and was planning to make good on his payments when he got a letter notifying him of the planned foreclosure.
"I don't think they should have that power," Harris said. "I have resolved my problems, and I always intended to do so.
"I had already made a check out and sent it off when I started getting these lawyer letters," he said. "It really ticks me off."
Judd Austin Jr., the
But
"The HOA doesn't want to own the property,"
The fact that
"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."
Each HOA is governed its own bylaws and practices. The HOA foreclosure filings don't have to specify how much is owed, and the amounts vary widely.
State lawmakers are looking into complaints about HOAs. Just this week, a Texas House panel in
Neighborhood associations argue that the economic downturn and housing market slowdown have caused a spike in unpaid fees.
"Yes, this has been an issue for many HOAs and condo associations, especially in areas where the housing market has taken the biggest hit – Florida, Southern California and parts of Arizona and Nevada," said Frank Rathbun, vice president of communications for the Virginia-based Community Associations Institute. "Of course, the recession hasn't helped."
Home equity defaults
The same factors that have contributed to record home foreclosures and late payments have also caused a jump in foreclosure postings for home equity loans.
Almost 250 such filings were made in the D-FW area this month, Foreclosure Listing Service estimates.
"We knew when those loans first came into vogue that it was just a matter of time before this happened," Roddy said. "People were borrowing to pay for a boat or a trip and putting the debt on their house."
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