HOA restricting rentals

Hi,

I am a homeowner in a Georgia subdivision with a HOA. Our HOA restricts to only a certain percentage of rentals. We have been on the waiting list for 1.5 years now with no word of where we are on the list. The HOA management company stated that we had no right to know where we were on the list. My husband and I have new jobs that require us to commute a long ways. We are upside down in our mortgage by 45,000. We cannot afford to absorb the difference between selling and the mortgage and repairs to the house in order to sell. The neighborhood has numerous forclosures, some even going for $107,000 for an $180,000 house. The foreclosures are bringing all the properties down and unsellable. I feel trapped. How is it that these same people can continue renting their houses for many years until they pull the plug? Basically that means we have the potential to never ever rent. It does not seem fair at all. People are just foreclosing instead. How is that making the neighborhood nice? Any advice?

Check your documents to see if there's a hardship clause allowing you to rent the home out even if it would increase the percentage, then follow its instructions to file an appeal.

This would also be a good time to ask about those homes that have been rented for "many years" - if the HOA approved the restrictions on renting, it might have grandfathered in the people who were already renting at the time. That usually means they'll get to rent until the house is transferred or sold. If that's the case, there's not much you can do about that.

As you may know, the reason many HOAs have issued rental restrictions is because many mortgage companies and banks (including FHA, Freddic Mac and Fannie Mae, the federal government programs) won't underwrite mortgages in communities where the owner-occupant percentage drops under 51%. This can also affect owner-occupants who aren't selling because they might have problems getting refinancing. Too many rentals could also affect the HOA's ability to get master insurance at affordable rates because some may look at the ENTIRE community as an investment property (which may or may not impact YOUR rates)

And then there are the problems with tenants who don't take care of the home or obey community rules (all they pay is the rent and can always move when the lease is up - or they get evicted). Another problem are the landlords who don't live in the community and are only interested in the rent check clearing - why should they care if their tenants throw loud parties all night, let their dogs run all the place, crapping everywhere, etc?) This also adds to dropping property values.

Unfortunately, because of the foreclosure crisis, many people like you are renting out their homes to keep money coming in so they can pay the property taxes, homeowner's insurance, HOA fees and everything else that comes with homeownership, not to mention just living in the USA these days.

Note to Steve - with all due respect, this is why the response isn't "to heck with the HOA rules" isn't the answer. You brought into the community knowing the rules existed and are legally obligated to follow them. HOA living isn't like buying a meal in a cafeteria, where you pick and choose what you want to eat. If a rule is unreasonable, there are ways to persuade your board to review the issue (or you can vote them off and put in folks more to your liking). Yes, I know things aren't always as simple as this, but life isn't simple. Personally, I'm not sure I'm not sure the expense that goes into renting the home would be worth it if all this homeowner comes away with is $100.

We will just agree to disagree.

Rules are good, but if your going to loose your house, as this person would, its best to ignore the "no rental rule".

Your best bet is to rent the place, but not tell the HOA. This way, the HOA can still report what it knows, its under the FHA limit. FHA loan is not a deal killer, people can still get a conventional loan.

If they get foreclosed on, the bank wont pay any dues. If you have owners not paying dues, like a bank, this also gets reported to the FHA along with the percentage of people renting. So your HOA looses either way. If they keep the place, rent it and pay HOA dues, the HOA will be better off.

If you have ANY cash flow, even $100 month it would be worth it. This saves you from foreclosure on your credit report which will allow you to buy other things in the future at a lower interest rate (cars, credit cards, etc) Then you can sell when the market gets better or you break even.