Slow Foreclosures

Our HOA is experiencing long delays in banks processing our community's home foreclosures. We recently had HUD take possession (finally) of a home that had be in foreclosure for 2 and 1/2 years and the homeowner owed over $2,800 in back dues. We have others homes, with owners still living there, which have been in foreclosure for over one year. They are all "underwater" and won't pay their dues while in foreclosure and the bank allows them to continue living there.

Is this typical, are other HOAs facing this same issue? Obviously the bank drags their feet and doesn't want to take possession but is this typical?

Just make sure you have a lien on these properties. Plus if the bank owns the property that means they are responsible for paying the dues. It is time to get a lien put into place or call the bank to let them know you have a HOA. They have to start paying their fair share or pay up when they finish foreclosing.

We had a house empty for almost 10 years. It was like a time machine walking into the place. Couldn't get the place to sell until someone finally bought it for rental purposes. Which was a relief finally. Unfortunately, the HOA can NOT touch these places. I've heard some try to rent them out. This is NOT a good idea and most likely illegal. So don't let anyone talk you into that. Just relax and make sure you have your paperwork in a row with a lien. I wouldn't foreclose on the home as it just does the work of the bank and the bank gets paid first. Leaving no money for the HOA in the end even though it did the work.

Very, very typical.

We had two in foreclosure were the people lived in them for almost a year. They both sold but we got no back dues from either sale as they were both short sales but at least the new owners are current with their dues.

We have one home that has been vacant for about 18 months. A 100% VA loan and the owner up and died 6 months into it. While we have filed a lien on it, we do not expect to see any money from the sale of it.

Many of the more financially aware HOA's are typically budgeting for a 5 to 10% dues short fall. 5 to 10% for dues shortfalls plus 15-20% for reserves is taking a chunk out of the daily operational budget from the get go but if not doing so, then financial trouble is inevitable.

The good news around here is foreclosures seem to have slowed some. Dues short falls seem to have bottomed out especially in associations where owners live year round and assuming the association is a desireable one.

Hope this helps.