HOA solvency/market problems

[jpinpb]

I was taking to a neighbor in my complex about my favorite topic, the RE market. He proceeds to tell me about an acquaintance of his who lives in a condo complex in El Cajon. She has a dilemma. She is one of four people left who are paying HOAs.

Now unfortunately I don’t have details and he didn’t either, as in name of complex or how many units, etc.

The problem is all the other owners have defaulted on their loans, are stil living there, just not paying on the loan or HOAs. Banks have not foreclosed yet.

The real problem is the four owners who are making mortgage and HOAs are paying and are now getting regular special assessments which are getting very expensive.

Apparently they got a HUGE water bill assessment and they are in a bind b/c if they don’t pay, the water will be turned off, is what he was saying.

Can the water department do that?

We discussed this further, that if the bank eventually forecloses, the bank is obligated to pay the HOAs, right? But I guess whichever bank has the first loan, if they sell and get lower than what is owed to them, then the second lien holder and the HOAs are $hit out of luck.

So do these four owners continue every month to pay this very high water bill and other special assessments? They don’t want to walk and f/up their credit.

Very catch-22 situation. One more reason to hate HOAs, besides their military rules and regulations.

If this happened in EC, what’s to stop it from happening in other complexes that get real bad?

[sandiego]

Once the foreclosure happens, the bank (owner) is obligated to pay the HOA. In most cases they won’t. The HOA assessments will accumulate and become a junior lien on the property (behind RE taxes, recorded trusts deeds). As you stated, if there is any equity in the home, they might eventually get paid when the home is sold but that could be years (and tens of thousands of dollars) later. The HOA can go after the former owner personally but that is usually a waste of time.

My building has $48,000 in HOA receivables. They also just wrote off $6,000 on one unit that is uncollectible because the former owner didn’t pay for several months before they were foreclosed on.

[sandiego]

Once the foreclosure happens, the bank (owner) is obligated to pay the HOA. In most cases they won’t. The HOA assessments will accumulate and become a junior lien on the property (behind RE taxes, recorded trusts deeds). As you stated, if there is any equity in the home, they might eventually get paid when the home is sold but that could be years (and tens of thousands of dollars) later. The HOA can go after the former owner personally but that is usually a waste of time.

My building has $48,000 in HOA receivables. They also just wrote off $6,000 on one unit that is uncollectible because the former owner didn’t pay for several months before they were foreclosed on.

[sandiego]

Once the foreclosure happens, the bank (owner) is obligated to pay the HOA. In most cases they won’t. The HOA assessments will accumulate and become a junior lien on the property (behind RE taxes, recorded trusts deeds). As you stated, if there is any equity in the home, they might eventually get paid when the home is sold but that could be years (and tens of thousands of dollars) later. The HOA can go after the former owner personally but that is usually a waste of time.

My building has $48,000 in HOA receivables. They also just wrote off $6,000 on one unit that is uncollectible because the former owner didn’t pay for several months before they were foreclosed on.

[sandiego]

Once the foreclosure happens, the bank (owner) is obligated to pay the HOA. In most cases they won’t. The HOA assessments will accumulate and become a junior lien on the property (behind RE taxes, recorded trusts deeds). As you stated, if there is any equity in the home, they might eventually get paid when the home is sold but that could be years (and tens of thousands of dollars) later. The HOA can go after the former owner personally but that is usually a waste of time.

My building has $48,000 in HOA receivables. They also just wrote off $6,000 on one unit that is uncollectible because the former owner didn’t pay for several months before they were foreclosed on.

[sandiego]

Once the foreclosure happens, the bank (owner) is obligated to pay the HOA. In most cases they won’t. The HOA assessments will accumulate and become a junior lien on the property (behind RE taxes, recorded trusts deeds). As you stated, if there is any equity in the home, they might eventually get paid when the home is sold but that could be years (and tens of thousands of dollars) later. The HOA can go after the former owner personally but that is usually a waste of time.

My building has $48,000 in HOA receivables. They also just wrote off $6,000 on one unit that is uncollectible because the former owner didn’t pay for several months before they were foreclosed on.

[jpinpb]

That is exactly the point. 6k on one unit. Multiply that by however many units. Banks are dragging their feet for many months beyond the customary 3 months to foreclose. That’s money not going to the HOA. And probably the HOA won’t go after the former owner, true. And junior liens nowadays won’t get paid b/c properties in foreclosure have been selling far less than what is owed.

It’s a problem that I have not seen or heard discussed much. It came up on a thread about a property in Escondido that was 70% off peak and SDR mentioned the HOAs were insolvent.

In the situation w/the four owners in the complex carrying the costs while other owners continue to live there, that’s a real dilemma.

And so I ask, if things continue to go bad and people walk just b/c of depreciating asset, even if they are capable of paying, then perhaps this issue will come up in other complexes that have HOAs.

[jpinpb]

That is exactly the point. 6k on one unit. Multiply that by however many units. Banks are dragging their feet for many months beyond the customary 3 months to foreclose. That’s money not going to the HOA. And probably the HOA won’t go after the former owner, true. And junior liens nowadays won’t get paid b/c properties in foreclosure have been selling far less than what is owed.

It’s a problem that I have not seen or heard discussed much. It came up on a thread about a property in Escondido that was 70% off peak and SDR mentioned the HOAs were insolvent.

In the situation w/the four owners in the complex carrying the costs while other owners continue to live there, that’s a real dilemma.

And so I ask, if things continue to go bad and people walk just b/c of depreciating asset, even if they are capable of paying, then perhaps this issue will come up in other complexes that have HOAs.

[jpinpb]

That is exactly the point. 6k on one unit. Multiply that by however many units. Banks are dragging their feet for many months beyond the customary 3 months to foreclose. That’s money not going to the HOA. And probably the HOA won’t go after the former owner, true. And junior liens nowadays won’t get paid b/c properties in foreclosure have been selling far less than what is owed.

It’s a problem that I have not seen or heard discussed much. It came up on a thread about a property in Escondido that was 70% off peak and SDR mentioned the HOAs were insolvent.

In the situation w/the four owners in the complex carrying the costs while other owners continue to live there, that’s a real dilemma.

And so I ask, if things continue to go bad and people walk just b/c of depreciating asset, even if they are capable of paying, then perhaps this issue will come up in other complexes that have HOAs.

[jpinpb]

That is exactly the point. 6k on one unit. Multiply that by however many units. Banks are dragging their feet for many months beyond the customary 3 months to foreclose. That’s money not going to the HOA. And probably the HOA won’t go after the former owner, true. And junior liens nowadays won’t get paid b/c properties in foreclosure have been selling far less than what is owed.

It’s a problem that I have not seen or heard discussed much. It came up on a thread about a property in Escondido that was 70% off peak and SDR mentioned the HOAs were insolvent.

In the situation w/the four owners in the complex carrying the costs while other owners continue to live there, that’s a real dilemma.

And so I ask, if things continue to go bad and people walk just b/c of depreciating asset, even if they are capable of paying, then perhaps this issue will come up in other complexes that have HOAs.

[jpinpb]

That is exactly the point. 6k on one unit. Multiply that by however many units. Banks are dragging their feet for many months beyond the customary 3 months to foreclose. That’s money not going to the HOA. And probably the HOA won’t go after the former owner, true. And junior liens nowadays won’t get paid b/c properties in foreclosure have been selling far less than what is owed.

It’s a problem that I have not seen or heard discussed much. It came up on a thread about a property in Escondido that was 70% off peak and SDR mentioned the HOAs were insolvent.

In the situation w/the four owners in the complex carrying the costs while other owners continue to live there, that’s a real dilemma.

And so I ask, if things continue to go bad and people walk just b/c of depreciating asset, even if they are capable of paying, then perhaps this issue will come up in other complexes that have HOAs.

[sandiego]

It will be a huge issue moving forward.

All things considered, the HOA is pretty impotent in a down market. I don’t know exactly how you solve the issue if people don’t feel that they have to pay on an unsecured obligation.

[sandiego]

It will be a huge issue moving forward.

All things considered, the HOA is pretty impotent in a down market. I don’t know exactly how you solve the issue if people don’t feel that they have to pay on an unsecured obligation.

[sandiego]

It will be a huge issue moving forward.

All things considered, the HOA is pretty impotent in a down market. I don’t know exactly how you solve the issue if people don’t feel that they have to pay on an unsecured obligation.

[sandiego]

It will be a huge issue moving forward.

All things considered, the HOA is pretty impotent in a down market. I don’t know exactly how you solve the issue if people don’t feel that they have to pay on an unsecured obligation.

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