Foreclosures have hit tens of thousands of Americans, and one can imagine the financial stress and devastation that causes a family. The foreclosure event and its aftershocks can implode a family, resulting in divorce and separating children from parents. As if a foreclosure isn’t bad enough, there is another threat that looms after the foreclosure. Homeowner Associations around the country are hiring attorneys and collection agencies to threaten the foreclosed homeowners after the foreclosures. Here is a quote from an attorney’s letter to an elderly woman who lost her home to foreclosure and has suffered from cancer and poverty:
We are a collection firm for Sabre Springs Neighborhood Homeowners Association. Your maintenance assessment debt has been referred to us for collection. We understand your property was foreclosed on [date], however, you are personally responsible for all association assessments up to the date of the Trustee’s Deed Upon Sale is recorded [a good writer the attorney is not]. As such, the amount due includes our charge for reviewing the documents, processing the paperwork, skip tracing costs and sending you this letter. . . .
If we do not receive payment or a written response disputing the validity of this obligation within thirty (30) days of the date of this letter, we will assume that you agree the amount set forth above is correct. In addition, it will also be assumed that you do not want a payment plan and that you simply are not going to pay, therefore, we will begin legal action on the thirty-first day following this letter.
This is the kind of offensive letter that has endeared attorneys to so many people. The attorney who wrote this letter is not a nice person, regardless of what he would say is just doing his job and enforcing a contractual or legal obligation.
The front page news here is not that attorneys can be such unpleasant human beings–it is that homeowners who get foreclosed upon may also be responsible for homeowners association assessments. That’s not a surprise if you think about it. What is a surprise is that the homeowners associations would make a decision to go after foreclosure victims who are themselves struggling to survive. Ninety five percent of these debts are probably uncollectable anyway. My suggestion for the board of directors of homeowner associations is that such debts should be written off, unless the homeowner is wealthy or is otherwise very capable of paying the debt without personally being forced into poverty.
Last Updated on July 27, 2012 by Chuck Marunde
This debt covers expenses. Who do you propose pay for it?
Good question Mitch. If there were an easy answer for that, there would be an easy answer for who should pay for the losses that banks sustain as a result of all the foreclosures, or who should pay for losses sustained by businesses when someone files for bankruptcy. Extreme financial hardship of elderly widows (and anyone) was my emphasis here. My point is not that associations shouldn’t ask for the money from people who can pay, but that associations should not attack victims of foreclosures who cannot pay. After all, as they saying goes, “You can’t get blood from a turnip.” But my other point as you can tell is that there is a time to go after someone with an obnoxious attorney, and there is a time not to, especially when they can’t afford it, don’t have the money, and certainly when they are either a widow or widower struggling to survive. In this case, it was all of the above plus cancer. Does anyone really think the association should go after this woman like this?
The reality is that this is a bad situation for everyone, and the remaining homeowners are not going to like getting stuck with dividing up the assessments of those who get foreclosed on and leave without being able to pay their share. It’s truly unfair to them. This is really a threat that homeowners have never had to deal with, at least at this level with so many going into default on their assessments. Who ever would have thought that we would have such a huge foreclosure nightmare around the country and so many thousands who also default on their homeowner dues as a result?
Sorry, But if she didn’t want letters like this, she shouldn’t have bought in an HOA community. The widow brought this letter on herself by buying in a development where she could end up owing money to the HOA. I think the letter is proof of why I think HOA’s are not helpful to neighborhoods, despite what many realtors might believe. She should have thought about this BEFORE she agreed to be bound by an HOA’s “rules”.
Also… Anyone who was paying attention could see the wave of foreclosures that was coming back in 2005 and 2006. Of course the assessments were going to be defaulted on when people were strapped for cash. I sold my home in Pierce County before the crash because I could not see where my home was worth anywhere near what some sucker was willing to convince the bank it was worth to them. It’s dropped at least $100K since then and the new owners will eventually bail on it because why keep paying on an asset that is constantly depreciating, further depressing prices. I will probably be able to buy it back in 4 or 5 years for less than I paid for it in 2002.