I actually covered the foreclosure/HOA issue in a story recently. Here’s a link.

Here’s a bit from that story:

“Matthew Swain studies the reserves of homeowners associations for a company called Association Reserves. He said state civil code doesn’t specify exactly to what extent an association must fund its reserves, just that a board must act in the best interests of the association. But among the 12,000 associations served by his company, the average HOA is between about 30 and 40 percent funded, leaving the homeowners susceptible to special assessments in the future. …

Homeowners associations can declare bankruptcy, said Vicki Vandruff, vice president of the California Association of Community Managers. Vandruff has seen special assessments range up to $100,000.

But Vandruff and other HOA experts haven’t yet heard of associations declaring bankruptcy.”