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Old 05-01-2011, 07:44 PM
 
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Want to see some of the innerworkings of the HOA foreclosure business in Mecklenburg County? There are several holding companies all traced back to the same lawfirm that wrote much of the Planned Community Act (47f).

It appears that these companies are created to bid on and win at HOA auctions that were foreclosed on by the same lawfirm that owns the holding companies.

Why?

I think they do it to keep the ownership out of the name of the HOA involved because it might look negative to have an HOA like Kingstree that I reported on ealier having 20 foreclosed properties in their name.

It feels a bit sneaky though. I think I'd be concerned about the fact that the real owner might be disguised here if I was shopping around comparing HOAs. How could I easily tell if an HOA was aggressive or not when it came to foreclosures if they are using a holding company?

Go to Real Estate Lookup and run the following names to see how many properties are owned by these holding companies. This is a real time result and doesn't include those that have already been sold.

Note how low most of the sales numbers are. For the most part these companies are using the foreclosures as final leverage against a homeowner to get them to pay up.

NEVER EVER BID on these properties. You can't examine the properties or do a title search aheard of time. You might think it's a steal to "win" at $8K for a waterfront property but you can't tell what the mortgage is. You could end up handing the check over and never getting anything.

Keep in mind that the lawfirm that did the foreclosure is also the one doing the auction and is also the one that owns the holding companies listed below.


ADL HOLDINGS LLC
JMA HOLDINGS LC
KDC HOLDINGS LLC
KLD HOLDINGS LLC
KMA HOLDINGS LLC


You can see who owns these companies by doing a lookup here: North Carolina Secretary of State
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Old 05-02-2011, 04:32 AM
 
Location: Charlotte, NC
7,041 posts, read 13,125,241 times
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Great post, G. A real eye-opener to those who are so much in favour of the HOA. I hope that everyone takes note of this and does their homework.
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Old 05-02-2011, 10:32 AM
 
Location: North Carolina
572 posts, read 1,407,326 times
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99% of properties that get foreclosed on are because the FIRST mortgage holder does it. You're assuming a bunch of homes got foreclosed on by the HOA. Wrong. They don't get paid until the first mortgage holder does and in a declining real estate market that means they most likely would get nothing. There's a reason you can't find the HOA's name on those foreclosures you researched and it's because the HOA didn't foreclose on those properties. The lien holder did.
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Old 05-02-2011, 01:01 PM
 
385 posts, read 768,824 times
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Quote:
Originally Posted by GCharlotte View Post
Why?
Not sure what the point of yr post is, but if its to unveal some sort of conspiracy within the interworkings oF HOAs its imply not the case.

HOAs setup shell companies to foreclose on the properties they lien in order to have the means to enforce their right to foreclosure (and hopefully get the owner to pay) regardless of the senior debt on the property. That way the senior lien holder's only recourse is to go after the shell company whose assets are theoretically minimal i/o the actual HOA itself.
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Old 05-02-2011, 01:01 PM
 
5,150 posts, read 6,655,509 times
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Quote:
Originally Posted by Time2Travel View Post
99% of properties that get foreclosed on are because the FIRST mortgage holder does it. You're assuming a bunch of homes got foreclosed on by the HOA. Wrong. They don't get paid until the first mortgage holder does and in a declining real estate market that means they most likely would get nothing. There's a reason you can't find the HOA's name on those foreclosures you researched and it's because the HOA didn't foreclose on those properties. The lien holder did.
WHOA you completely missed the point of my post. EVERY property (98 of them currently) owned by those companies are HOA foreclosures. EVERY SINGLE ONE OF THEM.

This just tracks back to a single law firm. The holding companies technically keep them out of HOA ownership but why? I'm guessing because it looks bad.

So, please go back and do the exercise in my first message. You don't have to do all 98. One is enough.

Click the deed reference (twice for the first time) and you will be taken to the Register of Deeds website and you can read the deed there.

What's surprising me lately on the HOA threads is I understand how we would have a difference of opinion but this isn't opinion. THIS IS FACT.

And why are so many holding companies required if they are all owned by the same person and all doing the same thing?

I guess it's time for me to create the website I keep threatening to create so you can see how these things flow.

The holding company is owned by the same lawfirm/principal that did the foreclosure. They are the ones that sent out the lien notice. They are the same that filed the foreclosure. They are the same that sent someone down to the courthouse to do the auction, and they are the ones that end up owning the home because they "win" the auction.

The holding company holds the home until one of four things happen:

1) Through an agreement with the homeowner which the homeowner pays the back fees/dues the holding company deeds the property back.

2) The first lien holder (mortgage) comes behind and forecloses on the deed of trust which forces the deed out of the holding company's hands.

3) The property goes on the market and is sold.

4) The holding company otherwise deeds the property to the HOA.

NONE of this happens without the HOA's explicit involvement. Some formal agreement has to be made to allow the holding company to operate in this manner on behalf of the HOA.
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Old 05-02-2011, 01:04 PM
 
5,150 posts, read 6,655,509 times
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Quote:
Originally Posted by Time2Travel View Post
99% of properties that get foreclosed on are because the FIRST mortgage holder does it. You're assuming a bunch of homes got foreclosed on by the HOA. Wrong. They don't get paid until the first mortgage holder does and in a declining real estate market that means they most likely would get nothing. There's a reason you can't find the HOA's name on those foreclosures you researched and it's because the HOA didn't foreclose on those properties. The lien holder did.
You are correct on most of this. 99%+ are 1st lien holder foreclosures. But more than 300 in Mecklenburg County per year are HOA foreclosures that are done IMO as bad business decisions because the HOA is not going to win.

You are correct on the fact they are not going to get paid and the real estate market makes it harder. You are incorrect that the cases I researched aren't HOA FCs. The question is why are they doing this if the market is so bad and the majority of these FCs are going to be lost to the 1st lien holder.
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Old 05-02-2011, 02:46 PM
 
385 posts, read 768,824 times
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Quote:
Originally Posted by palmetto75 View Post
Not sure what the point of yr post is, but if its to unveal some sort of conspiracy within the interworkings oF HOAs its imply not the case.

HOAs setup shell companies to foreclose on the properties they lien in order to have the means to enforce their right to foreclosure (and hopefully get the owner to pay) regardless of the senior debt on the property. That way the senior lien holder's only recourse is to go after the shell company whose assets are theoretically minimal i/o the actual HOA itself.

Further to above. HOAs are not the only entities that do this. Construction companies often do it as a means of enforcing liens. Its basically a big game of chicken. "Pay up for I foreclose. If I foreclose I really don't get anything (depending on the senior debt), but at least I get to take away yr rights to sit in the property and pay nothing."

I hate HOAs as much as the next person, but in these cases I don't balme them. The banks are a disaster and are letting people stay in houses for months if not years w/o paying. If the owners aren't paying the mortgage you can bet they aren't paying their fees and assessments.
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Old 05-02-2011, 03:14 PM
 
5,150 posts, read 6,655,509 times
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Quote:
Originally Posted by palmetto75 View Post
Further to above. HOAs are not the only entities that do this. Construction companies often do it as a means of enforcing liens. Its basically a big game of chicken. "Pay up for I foreclose. If I foreclose I really don't get anything (depending on the senior debt), but at least I get to take away yr rights to sit in the property and pay nothing."

I hate HOAs as much as the next person, but in these cases I don't balme them. The banks are a disaster and are letting people stay in houses for months if not years w/o paying. If the owners aren't paying the mortgage you can bet they aren't paying their fees and assessments.
No doubt you've hit the nail on the head but why would you need 7 or 8 different companies and why would the holding companies be owned by the same lawfirm?

98 holdings by a single lawfirm seems excessive to me. And I am not calling it a conspiracy but I do think there's something shady going on. I just don't think what you outlined is understandable to most untrained boards of directors who are taking the word of the lawfirm that this is the best thing to do. Meanwhile, the lawfirm is the one most likely to make any dough on these deals.

And I agree with what you say about people not paying assessments and mortgage. So the question is, why foreclose to begin with? Maybe it was a better business model 5 years ago?

And it isn't hard to check to see if someone is about to be foreclosed on by a bank because they file a substitute trustee first. If this document is already on file then it's absolutely pointless to pay the money to FC on them.

I admit I don't know how the lawfirm is making money on this. Surely the HOA boards aren't paying $2000 upfront to FC on these properties if the amount owed is only a few hundred and they don't know if they are going to get their money back.
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Old 05-02-2011, 04:08 PM
 
385 posts, read 768,824 times
Reputation: 387
Quote:
Originally Posted by GCharlotte View Post
No doubt you've hit the nail on the head but why would you need 7 or 8 different companies and why would the holding companies be owned by the same lawfirm?

98 holdings by a single lawfirm seems excessive to me. And I am not calling it a conspiracy but I do think there's something shady going on. I just don't think what you outlined is understandable to most untrained boards of directors who are taking the word of the lawfirm that this is the best thing to do. Meanwhile, the lawfirm is the one most likely to make any dough on these deals.

And I agree with what you say about people not paying assessments and mortgage. So the question is, why foreclose to begin with? Maybe it was a better business model 5 years ago?

And it isn't hard to check to see if someone is about to be foreclosed on by a bank because they file a substitute trustee first. If this document is already on file then it's absolutely pointless to pay the money to FC on them.

I admit I don't know how the lawfirm is making money on this. Surely the HOA boards aren't paying $2000 upfront to FC on these properties if the amount owed is only a few hundred and they don't know if they are going to get their money back.
I don't think there is anything shady. You need that many companies to ensure there are never any assets in them at any given time otherwise the senior debt holder "may" have some recourse against them once they foreclose. How much recourse they may have I'm not 100% sure of but I know the small construction firm I worked for had 3 enities that existed for this sole purpose. The attorney owns them all b/c they are shell companies with no assets so ownership is really immaterial.

In the heyday of real estate there were investors that bid on these foreclosures knowing the existance of senior loans. They still used shell companies to do so (if they were smart that is). Once the full extent of the debt was known they either went forth with taking title and paying off the senior debt or did not take title and let the senior lender foreclose down the road.
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Old 01-26-2012, 12:08 PM
 
904 posts, read 1,401,804 times
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adl holdings llc who are they?
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