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Old 01-05-2012, 12:07 PM
 
6 posts, read 23,352 times
Reputation: 18
Default Can HOA foreclose without paying the mortgage holder a dime?

I own (or should say, I used to own) a condo in North Las Vegas. A couple of months ago, the HOA sent multiple letters stating they would be foreclosing upon my condo for non-payment of HOA dues. I then received a notice that a trustee sale was to take place. I ignored these letters, as I really didn't care if the HOA (or the mortgage holder for that matter) foreclosed upon it- I just wanted the bank to take the damn thing, so I could start the long slow process of rebuilding my credit.

Anyway, the day of the trustee sale came and went, and I got curious, so I went to the Clark County Assessor's website. Sure enough, according to the Assessor, the new owner is the HOA. I researched further and found that the HOA had "purchased" the home at the sale for $4451, which was the cost of the overdue HOA dues and late fees, penalties, etc.

Now, my question... How can the HOA now have legal title to this property, when the mortgage company still has an unsatisfied debt against the place, to the tune of $195,000? I assume the HOA is now renting the place out, and collecting a nice, fat rent check and HOA dues, and they don't even have to make a mortgage payment. How on earth is this legal????

Other facts- the mortgage (there are two, both held by the same company) is currently 20 months overdue. The mortgage company still calls me at least 8 times a day, asking if I am willing and able to get the mortgage current. Also, I haven't lived in the condo for over 4 years, but I was renting it up until a few months ago.

If anybody can shed some light on this, I'd sure appreciate it.

 
Old 01-05-2012, 12:31 PM
 
Location: Banana Republic, LA
358 posts, read 573,052 times
Reputation: 257
Totally legal, and most likely they will try and rent the home out to recoup some of their losses on the overdue fees. The good news is they won't be able to come after you for them.

The Association Has Foreclosed on its Lien - Now What? :: HOA Law Blog
 
Old 01-05-2012, 12:56 PM
 
1,043 posts, read 1,407,269 times
Reputation: 645
I had thought HOAs were able to do what you're describing, however after a little research it appears that shouldn't be the case.

HOA liens do have "super priority" status (similar to real estate taxes), but under NRS 116.3116 2(b), their super priority status doesn't extend ahead of the first mortgage.

Based on what you've described and the NRS statue above, I would assume that either:

(1) The HOA can take the unit, but would have to make the 1st lender whole. I'm not sure if they could essentially start making payments again on the 1st loan or if they would have to do it via a lump sump. I guess depending on the amount owed on the 1st this could be financially viable to the HOA since it would clear off any 2nds, 3rds, etc. However I would be extremely surprised if that is the case.

(2) The HOA took the property, but the 1st lender can continue to foreclose, essentially taking it away from the HOA, but they would have to pay the HOA 9 months of monthly dues, plus unlimited amounts of collection, late, etc. fees (probably including the costs of this foreclosure). This could be more advantageous for the HOA since they would be collecting income between the now and the time the 1st forecloses. My guess is this is what is happening, however it seems very unconventional.
 
Old 01-06-2012, 04:06 PM
 
63 posts, read 109,299 times
Reputation: 37
Quote:
Originally Posted by wrench69 View Post
I own (or should say, I used to own) a condo in North Las Vegas. A couple of months ago, the HOA sent multiple letters stating they would be foreclosing upon my condo for non-payment of HOA dues. I then received a notice that a trustee sale was to take place. I ignored these letters, as I really didn't care if the HOA (or the mortgage holder for that matter) foreclosed upon it- I just wanted the bank to take the damn thing, so I could start the long slow process of rebuilding my credit.

Anyway, the day of the trustee sale came and went, and I got curious, so I went to the Clark County Assessor's website. Sure enough, according to the Assessor, the new owner is the HOA. I researched further and found that the HOA had "purchased" the home at the sale for $4451, which was the cost of the overdue HOA dues and late fees, penalties, etc.

Now, my question... How can the HOA now have legal title to this property, when the mortgage company still has an unsatisfied debt against the place, to the tune of $195,000? I assume the HOA is now renting the place out, and collecting a nice, fat rent check and HOA dues, and they don't even have to make a mortgage payment. How on earth is this legal????

Other facts- the mortgage (there are two, both held by the same company) is currently 20 months overdue. The mortgage company still calls me at least 8 times a day, asking if I am willing and able to get the mortgage current. Also, I haven't lived in the condo for over 4 years, but I was renting it up until a few months ago.

If anybody can shed some light on this, I'd sure appreciate it.
How nice...you did not pay the mortgage or fees but you were able to rent it...now, who is the real winner here?
 
Old 01-07-2012, 02:34 PM
 
6 posts, read 23,352 times
Reputation: 18
You're right Trocadero, I am the true crook here. I single-handedly forced the banks to give out sub-prime mortgages by the truckload, to people who had absolutely no chance to make the payments when those ARMs adjusted (and the banks knew it). I then managed to single-handedly bring down the entire Las Vegas housing market by making a business decision to walk away from a mortgage on a condo that is now worth 30% of what I initially paid for it. The banks and mortgage companies are the true heroes in this story. They are saints, above reproach, and to reward them, we decided to give them trillions of dollars in bailout money.

I get so sick and tired of people who seem to think walking away from a mortgage is a sin. It is a BUSINESS DECISION. When the banks or other companies decide to cut loose a bad investment, everyone says it's a great move. They do it all the time. But when an individual does the same thing with their mortgage, they are deemed a horrible person for doing so.
[mod cut-- personal/rude]

Last edited by observer53; 01-29-2012 at 08:10 AM..
 
Old 01-07-2012, 03:04 PM
 
30 posts, read 43,297 times
Reputation: 27
Not a good decision, of any kind, to identify yourself as a crook while asking for help.

As a property owner in Las Vegas, I do not feel compelled to help you -- other than to suggest that your current situation may reflect your past situations, and this may not be coincidental.
 
Old 01-07-2012, 05:04 PM
 
Location: Sunrise
5,988 posts, read 4,413,919 times
Reputation: 3642
Quote:
Originally Posted by wrench69 View Post
Save your self-righteous, sanctimonious comments for the other people living up there in your ivory tower. You don't have a clue about my current situation, so you don't have any right to comment on it. I came to this website for some help, not a lecture.
What kind of help do you want? You bought a house above your means, defaulted, and rented it out during the foreclosure process grind.

And while I'm no fan of banks, it takes two to tango. They shouldn't have offered you a loan. But you didn't have to sign your name to that ARM you couldn't afford, either. You took a risk, lost, and now you're paying the price.

So go rebuild your credit. You don't need a forum to do that.
 
Old 01-07-2012, 09:57 PM
 
160 posts, read 159,964 times
Reputation: 71
Quote:
Originally Posted by wrench69 View Post
I own (or should say, I used to own) a condo in North Las Vegas. A couple of months ago, the HOA sent multiple letters stating they would be foreclosing upon my condo for non-payment of HOA dues. I then received a notice that a trustee sale was to take place. I ignored these letters, as I really didn't care if the HOA (or the mortgage holder for that matter) foreclosed upon it- I just wanted the bank to take the damn thing, so I could start the long slow process of rebuilding my credit.

Anyway, the day of the trustee sale came and went, and I got curious, so I went to the Clark County Assessor's website. Sure enough, according to the Assessor, the new owner is the HOA. I researched further and found that the HOA had "purchased" the home at the sale for $4451, which was the cost of the overdue HOA dues and late fees, penalties, etc.

Now, my question... How can the HOA now have legal title to this property, when the mortgage company still has an unsatisfied debt against the place, to the tune of $195,000? I assume the HOA is now renting the place out, and collecting a nice, fat rent check and HOA dues, and they don't even have to make a mortgage payment. How on earth is this legal????

Other facts- the mortgage (there are two, both held by the same company) is currently 20 months overdue. The mortgage company still calls me at least 8 times a day, asking if I am willing and able to get the mortgage current. Also, I haven't lived in the condo for over 4 years, but I was renting it up until a few months ago.

If anybody can shed some light on this, I'd sure appreciate it.
You are actually a person who needs an RE lawyer. And pretty quick. The rub here is that you have unfortunately gotten into a situation off the beaten track.

Basically if the lender forecloses on you there is a thing called the one action rule. If they foreclose they can't sue. If they don't foreclose they can sue.

So they did not foreclose and they don't need to foreclose on you as you no longer own the home. They now foreclose on the HOA. But where does that leave you? Worst case outcome you could still owe the lender the full loan balance...and worse you could be liable for the income taxes on the whole sum as imputed income if they forgive the debt..

I am a very good RE/layman at this sort of thing and you are way beyond my skill level. You need a good RE lawyer and maybe an accountant and soon.

You may not be able to escape the tax liability by even BK.

So get some good legal/accounting advice quick. Your only good way out may be to buy the place back from the HOA...if they will cooperate.

It may also be all fine...but I don't think anybody would know but a good professional who researches the matter...and they may not know.
 
Old 01-07-2012, 11:50 PM
 
63 posts, read 50,035 times
Reputation: 68
Quote:
Originally Posted by ScoopLV View Post
What kind of help do you want? You bought a house above your means, defaulted, and rented it out during the foreclosure process grind.

And while I'm no fan of banks, it takes two to tango. They shouldn't have offered you a loan. But you didn't have to sign your name to that ARM you couldn't afford, either. You took a risk, lost, and now you're paying the price.

So go rebuild your credit. You don't need a forum to do that.

Almost everything we buy on a day to day basis depreciates. Does this mean If I buy a brand new car this month on payments and realize a month later I lost 25% of its value just driving it of the lot that I don't have to make the payment any more because its a bad investment? Or what if I put a brand new big screen on my credit card and realize a year later I owe more on it than the new model sells for can I stop making my credit card payment and blame someone else? One of the biggest problems with people in our country is no one want's to take responsibility for there own actions, always someone elses fault. Grow up people and pay off your debts, stand behind what you say and do, lets become accountable as a country again!
 
Old 01-08-2012, 12:59 AM
 
Location: H-Town... "A place to call home"
2,532 posts, read 2,198,000 times
Reputation: 868
Quote:
Originally Posted by luckpants View Post

Almost everything we buy on a day to day basis depreciates. Does this mean If I buy a brand new car this month on payments and realize a month later I lost 25% of its value just driving it of the lot that I don't have to make the payment any more because its a bad investment? Or what if I put a brand new big screen on my credit card and realize a year later I owe more on it than the new model sells for can I stop making my credit card payment and blame someone else? One of the biggest problems with people in our country is no one want's to take responsibility for there own actions, always someone elses fault. Grow up people and pay off your debts, stand behind what you say and do, lets become accountable as a country again!
LV real estate is FUBAR bigtime.
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