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Old 10-26-2008, 09:57 AM
 
19,759 posts, read 59,753,714 times
Reputation: 36714

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When any complex system has a part fail, that failure can destroy other parts. We've all heard about how the failure of a timing belt on an interference car engine can ruin the valves and trash the engine. That same effect is now happening with foreclosures in south Florida and may spread to other areas as the economy slows and layoffs continue.

Quoting from another city-data post:

How the foreclosure crisis is affecting us...
"The condo complex wife and I live in has 353 units. We received a letter from the association stating that 142 of these units are in Lender Foreclosure. They state that all these people are of course not paying their HOA dues anymore....and many others that are not in actual foreclosure YET are following suit as well. Because of this, and to cover their shortfall, they have slapped us with a 1,700 special assessment due within...get this....2 months. If we pay after 2 months, the amount will be 1,950 and if we wait even more, of course they will tack on even more late fees.

So let this be a warning to all...and I have mentioned this before....if you are buying into a complex or home development that has an HOA.....be wary ! Many of your neighbors are going into foreclosure or already have...that means YOU will be stuck paying the bill. Refuse to pay it ? The association by law will foreclose on you due to your failure of paying your HOA fees."
What is fascinating here is that the HOAs and condo boards will be creating a whole new round of foreclosures, as people who faithfully paid their mortgages and dues, in the expectation that others would do so as well, now get burdened with unreasonable fees. Some may be able to pay the extra fees, but many may not have that option. If I was in a condo like this, there is no question but what I would walk. With roughly half of the condos in foreclosure, there is no way that this association is going to survive without lowering standards or even turning some units into section 8 rentals.

This is a near perfect example of why personal financial independence has to include NOT signing on to anything that depends on status quo or the kindness of strangers. I can't imagine that any of the buyers of those condos ever considered what would happen in a meltdown. As word gets around of the problems with HOAs and condo associations, I hope that we may see cities and towns rethinking the desirability of requiring developers to create these extra layers of expensive bureaucracy.

I suppose the good news is that some of these condo dwellers will now be defaulting on mortgages and buying single family dwellings outside of HOAs, which will stimulate that market. It also might end up turning some condos into affordable apartments.
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Old 10-26-2008, 11:19 AM
 
48,508 posts, read 88,740,240 times
Reputation: 18192
I think it realy depends on the area. Many HOA were a direct response to peole that moved into a neighborhood and found that many of teh homeowners did not keepup thier propwerty in the new buyers market created by easy cradit. Many also could buy the home but not maintain it finance wise. Many new additions had a turnover rate of 90% within ten years because of this and the additons went to pot; so to speak. Same goes for gated communities;they wanted to elimanate this type buyer in their neighborhoods pali and simple.
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Old 10-26-2008, 11:37 AM
 
Location: Heartland Florida
9,324 posts, read 24,745,414 times
Reputation: 4969
In Florida hoa's exist because the developments are often too crammed to meet existing setback requirements. With a condo developers can stuff as many units as they can bribe the county to build, and the HOA is responsible for roadway and public area maintenance. Gated communities are often just a group of overpriced homes that replaced a 5 or 10 acre country home. Anyone who buys into the condo scheme is taking a risk, I would never live anywhere not on public streets or on an easment in place. I see in the future a lot of condos becoming apartments again.
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Old 10-26-2008, 03:15 PM
 
26,863 posts, read 42,112,002 times
Reputation: 15120
Quote:
Originally Posted by harry chickpea View Post
When any complex system has a part fail, that failure can destroy other parts. We've all heard about how the failure of a timing belt on an interference car engine can ruin the valves and trash the engine. That same effect is now happening with foreclosures in south Florida and may spread to other areas as the economy slows and layoffs continue.

Quoting from another city-data post:

How the foreclosure crisis is affecting us...
"The condo complex wife and I live in has 353 units. We received a letter from the association stating that 142 of these units are in Lender Foreclosure. They state that all these people are of course not paying their HOA dues anymore....and many others that are not in actual foreclosure YET are following suit as well. Because of this, and to cover their shortfall, they have slapped us with a 1,700 special assessment due within...get this....2 months. If we pay after 2 months, the amount will be 1,950 and if we wait even more, of course they will tack on even more late fees.

So let this be a warning to all...and I have mentioned this before....if you are buying into a complex or home development that has an HOA.....be wary ! Many of your neighbors are going into foreclosure or already have...that means YOU will be stuck paying the bill. Refuse to pay it ? The association by law will foreclose on you due to your failure of paying your HOA fees."
What is fascinating here is that the HOAs and condo boards will be creating a whole new round of foreclosures, as people who faithfully paid their mortgages and dues, in the expectation that others would do so as well, now get burdened with unreasonable fees. Some may be able to pay the extra fees, but many may not have that option. If I was in a condo like this, there is no question but what I would walk. With roughly half of the condos in foreclosure, there is no way that this association is going to survive without lowering standards or even turning some units into section 8 rentals.

This is a near perfect example of why personal financial independence has to include NOT signing on to anything that depends on status quo or the kindness of strangers. I can't imagine that any of the buyers of those condos ever considered what would happen in a meltdown. As word gets around of the problems with HOAs and condo associations, I hope that we may see cities and towns rethinking the desirability of requiring developers to create these extra layers of expensive bureaucracy.

I suppose the good news is that some of these condo dwellers will now be defaulting on mortgages and buying single family dwellings outside of HOAs, which will stimulate that market. It also might end up turning some condos into affordable apartments.
In our community with many foreclosures and bankowned properties this isn't happening. We even might see the HOA fee go down. This due to the HOA having to foreclose on homes and owning them and selling them. this way the HOA got their money back and so far they have sold 3 homes this year.
Also bankowned properties when they are sold the HOA lien/fees have to be paid off by the bank so the HOA get's their money and fees back. So this year we have more money due to this and they are talking about lowering our fee. Before we had a HOA management comapny who didn't do much so it would cost us a lot of money, so by sending letters with fees and putting a lien on the proeprty it helped solve many issues. Also the HOA has a person who mows the lawns of empty (and properties that aren't maintained) homes and the bill + lawyers fee will go to the home owner/bank. That way the community looks nice and we get more money in....Nov. 6 the HOA will have the next proeprty auctioned off. We are very happy with this since that home owner has broken windows in the garage, a yard that has no plants, gets mowed by the HOA while the owner has another $ 400 K home and a $ 100 K mercedes and another car in their driveway....blinds that look like crap. (the inside is decorated with expensive stuff)....the people always play baseball in their yard, which no one minds if they just would keep up their yard and pay their HOA fees just as we all have to do. (they owe $ 5,000 to the HOA).
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Old 10-26-2008, 04:08 PM
 
Location: Sarasota FL
6,864 posts, read 10,358,608 times
Reputation: 6652
If the development is in a CDD, the land developer has their debt and maintenance collected in the owners property tax. They can thank the FL legislature for that part of the law. Yet the individual HOA's in the CDD have to beg people to pay their maint fee.
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Old 10-26-2008, 04:18 PM
 
Location: Great State of Texas
86,068 posts, read 76,925,014 times
Reputation: 27653
Quote:
Originally Posted by bentlebee View Post
This due to the HOA having to foreclose on homes and owning them and selling them. this way the HOA got their money back and so far they have sold 3 homes this year.
.
Your HOA actually owns the homes and funds mortgages ?

I didn't think HOA's could do that.
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Old 10-27-2008, 12:58 AM
 
3,853 posts, read 12,060,074 times
Reputation: 2522
The only thing I've seen happening is that HOA are not cutting back on services.
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Old 10-27-2008, 01:50 AM
 
48,508 posts, read 88,740,240 times
Reputation: 18192
Quote:
Originally Posted by tallrick View Post
In Florida hoa's exist because the developments are often too crammed to meet existing setback requirements. With a condo developers can stuff as many units as they can bribe the county to build, and the HOA is responsible for roadway and public area maintenance. Gated communities are often just a group of overpriced homes that replaced a 5 or 10 acre country home. Anyone who buys into the condo scheme is taking a risk, I would never live anywhere not on public streets or on an easment in place. I see in the future a lot of condos becoming apartments again.
That really has to do with your state. In Texas as long as the roadway is built to specs and the public has access the roadway it can be dedicated which means the city/county takes over maintenance. If they build the raodway even if not to specs and then gate it to deny the public access it is a private roadway and they are responsible for their own maintenance. Most have guards or a gate operated by remotes controlled from the homeowner at home or their vehcile.We even have public housng that are gated with federally owned roadways, Only the residence have access control. Cities love gated communties because they still pay taxes but the raodway being private means no street maintenance to the city.That helps because that money goes to pay maintenance on public streets.The same with condos ;they can be on a dedicated street or private road. Of course the gated with private are the best areas if you can afford it.Most include private parks ;pools and other recreation.Great if you can afford it.
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Old 10-27-2008, 05:08 AM
 
26,863 posts, read 42,112,002 times
Reputation: 15120
Quote:
Originally Posted by HappyTexan View Post
Your HOA actually owns the homes and funds mortgages ?

I didn't think HOA's could do that.
No the don't fund mortgages, but they bought some houses on the court house steps and sold them and it seems they did a good job so our HOA fee didn't go up that much....it was and still is a mess in here although the community looks good since the HOA started to mow the lawns of houses that were empty or not maintained....I had to look for almost 3 years at a property with grass so high and no sprinklers on (in Fl. that will cause all kind of bugs to get every where)....so how do you explain to other home owners when they get a letter about anything wrong, if houses look so bad!

We have now in our sub community of 48 houses at least 8 houses that are empty and/or bankowned + at least 8 houses in foreclosure....non of the people are or were in financial trouble due to personal issues, all investors, mortgage brokers (Arm selling brokers) and only 1 house is on the MLS, so what will happen to the rest? But if you would come in our neighborhood you wouldn't notice all the empty houses, only when you look very good.

The house next to me was on the market from day 1 of the owner moving in (sales price was way too high, $ 80K over market price) and listed with at least 3 different realtors, 1 the so called best brokers office and most selling in the Tampa area! Well 3 years later it is almost a year empty, bankowned and except for a shabby mow company we don't see any one and it isn't listed on the MLS...so what will happen? The bank is still paying for the property taxes, HOA fee + extra fees for the damage this shabby mow company has caused....
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Old 10-27-2008, 05:43 PM
 
Location: Great State of Texas
86,068 posts, read 76,925,014 times
Reputation: 27653
Bentlebee - at least you have an active HOA that is working to preserve your subdivision.
You are lucky. There are plenty of others that have let the places fall to pieces and have burdened the other homeowners for the fees due.
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