Foreclosed home in neighborhood

Not much you can do with a bank foreclosure. Just have to wait until the property is sold and new owners pick up to start new with dues. I would not put a lien on this property as your not going to get anything out of that process at this point. Your HOA does NOT want to own this property either. Just waiting it out is the best and only real option.

Keep in mind that if your HOA is responsible for lawncare, then this property's lawn needs to still be maintained. You need to keep up the best appearances for your neighborhood/HOA. So it can't skimp out on certain services. It just can't touch the home/condo.

Jennifer,

Banks have tons of homes that are in various states of foreclosure. You need to determine where this one stands as that will have a lot of effect on what remedies you may have.

Start with searching recorded documents for the last known owner of the home. You should be able to find what bank or lender holds the mortgage and you should be able to find any notices of foreclosure against the last owner. If you find notices that indicate foreclosure has been started, then you will have to search the court records to find the case file and see how far along the process is. Because of the glut of foreclosures and a shortage of qualified buyers, banks have been fairly lax about pushing foreclosures through the courts.

There are several options available to you and the wisdom of each depends on how soon the bank will take title and find a new owner.

1. Do nothing. This is advisable if the bank is likely to obtain title within the next six months.

2. Take possession of the house and rent it out. While not exactly legal, it is a practical way to deal with the problem if you believe that you have six months to two years before the bank will finish its foreclosure action. Structure the rent to cover the current and past-due assessments and write up a lease that informs the tenant that his lease may terminate on short notice. The only party who could lawfully object to this is the person who abandoned the home but still has title. He is unlikely to initiate any sort of civil action as he owes all the back assessments to the HOA.

3. Obtain title through HOA foreclosure. This strategy works if the bank's foreclosure is a long ways off. The HOA obtains title and rents the house out until the bank exercises its superior lien and takes title. This solution overcomes the problem of ownership in the above scenario but has at least two serious drawbacks: cost (at least $10,000) and you may be required to find the legal owner and serve him with process.

Somewhere I recently read that Illinois has a law that allows at least some associations to take physical possession of a home and rent it out to collect unpaid assessments. This may apply only to condo's and not HOA's, but it is worth looking into.

How is something not exactly legal but practical? Our board mentioned something about taking over a foreclosed home and renting it out tonight in our meeting.

The HOA does NOT own this property. So it can not take possession of it. If they were to do this "renting" idea, then it would only do them harm. The bank finds out the HOA rented this property, ALL that rent they collected would be owed to the bank. Would your HOA like that idea of owing thousands of dollars to the bank or the owner if they came back to reclaim? NOT a good idea.

The reality is that it is a foreclosure and has to go through the process. You can check the tax records for ownership. The bank may have a department that maintains foreclosed property. Plus need to contact them about dues. However, banks generally do not pay until the house is sold if then. This is the best and legal thing your HOA can do.

I don't believe you know how this forum works Mathew. We are considerate (A HUGE word) to each other. So I would suggest toning it down a bit with your attitude. You are not always right. To have a HOA own a foreclosure home is a BAD idea and never advisable. I've done a foreclosure first hand and know exactly how it works. In the end, the HOA owning the home is not advisable and not a good option. To give the idea to a poster in hopes of collecting or making money is giving false hope.

A foreclosure for a HOA stops the bleeding. A bank foreclosure in a HOA is an open wound. However, it is also an opportunity for new owners to come in and start all over again. No matter how the process works in your state, a HOA should NOT own a home unless they are financially prepared to make house payments, collect rent, pay the HOA dues, maintenance costs, utilities, and all the expenses associated with owning a home. All of which comes out of ALL the members pockets.

So how am I wrong by advising it is just not a good idea to just let the bank foreclose and take no action? Seems to me it is a no win situation for a HOA to do anything with a foreclosed property if they are not doing the foreclosure. I am not about to tell someone that doing something with foreclosed property no matter how "legal" options seems to be, is a good idea. It is just not and this is from someone who actually was a house flipper/investor and did a HOA foreclosure.

We did the same thing JohnC. Our HOA was responsible for lawncare. So we continued to keep up with the mowing. The house we left alone. However, we did have to interfere once due to a broken pipe. Had to go and turn off the water to the home. There was one home basically abandoned for 10 years! It was like walking into a time machine. That house wasn't a foreclosure eiher. The owner was an LLC and just had it on the "books". Try placing a lien on a LLC is a bit more complicated.

A HOA has nothing to do with "house values". It is just to make the homes/property "ATTRACTIVE" to potential buyers. More buyers will buy into a nice area with certain amenities than homes/property without such efforts/options. Atleast that is the theory. A foreclosure is two fold. Having an abandoned unattractive property does make the HOA maybe not look good and opens it up to squatters. The second fold is a foreclosure does effect home values. The home values are based on location, square footage, # of rooms, and what houses have sold for in a few mile radius. Unfortunately, foreclosures/short sales do show up on that list. They usually sale at a low price which throws off values. You have a 200K house and a foreclosure goes for 100K, you can expect appraisal prices will be effected some. The situation is usually re-evaluated every 3 - 6 months. So one foreclosure in a year would have little impact.

Overall, considering a HOA is ONLY funded by it's members for it's members, I don't think every owner wants to own a home. Which is what would happen if a HOA purchases a foreclosed home. The expenses do not outweigh the benefits.

That is not "value". That is "ATTRACTIVENESS". There is a difference. Anyone can not buy a house for ANY reason. I hated the wallpaper on one house. The house still sold for close to the asking price or atleast the appraised value. Banks typically do not approve loans for homes that are not worth the appraisal amount. My house was listed at 75k. The appraisal came back to 74k. We had to split the difference and kick in 500 dollars.

So you may love a house and want to lay a million down. If the house is not worth a million dollars then you bought just because you were attracted to it. House value is actual math based. There are the numbers involved.

Like beauty, home value all in the eye of the beholder. Your home has no more value in a HOA than any other home outside of one. Matter of fact, FHA or federally backed loans have certain requirements for a HOA (PUD form), They require their own appraisal form to be filled out with the rental restrictions, fee simple, open liens, and general HOA financial health to evaluate loan risk. They see too much debt, high rental rate, or financial issues (lawsuits, outstanding debt collection) then they don't offer their loans. It's not based on how "pretty" the place looks.

HOA's have always been "sales tools". They were setup by developers to sell their lots and builders to build homes. It is ATTRACTIVE to owners to think they can regulate the property they live with rules of their own making. Plus they are responsible for maintaining what they have amongst themselves without county/city interference. It is inferred that it is to also maintain "Home value" by doing so. Really it's just making sure to be attractive to more buyers.

All things being equal, a home with a pool may have more value to a person who has kids. A home that has access to a pool, may have more value to an owner without kids. Pools typically do not add value to a home. It really depends on what attracts me to assign value to that purchase.