Pursued after Foreclosure: Deficiency Judgments & Unpaid HOA

[phsunny]

Hi bcohen,

Yes, we filed for Chapter 7 BK and were dischrged in April 2010. We did not reinstate the mortgage, therefore, it was included in our BK. Thanks for your kind words......and I have an update. Hubby spoke with Wells Fargo today and told them that the HOA redid the streets after WF secured the property (changed the locks) and are looking to be paid. WF told him that all the HOA needs to do is fax an invoice for the street fee along with our loan # and they will see that it gets paid!! Sounds crazy I know!!! But this certainly puts a new light on the situation and our ability to reach an acceptable settlement with the HOA tomorrow in court. Wish us luck!!

[bcohen]

Our HOA has served us with a summons to appear in court tomorrow 3/27/12 in regard to past due HOA fees as well as a "new street fee" for a street that was redone after we vacated the property and the banks changed the locks (about $2500 total not to mention court fees and late charges). Hubby spoke with the HOA's lawyer last week and asked if the HOA Trustees had shown him the Hardship Letter we had sent them when we left last year. He said no. Hubby offered a few hundred dollars that we have saved up, lawyer said he would run it by the Trustees to see if we can work out a settlement of some kind prior to court.

I hope more folks write in about this and give us their stories, as I think we are still at the beginning of this nightmare with banks delaying foreclosures and HOA's coming after broke ex-neighbors. As it stands for us, we haven't made a payment on that house in 2.5 years and there has been no official notice of a sheriff's sale or anything like that.....meaning our names are still on that damn deed!

I will update you all on what happens tomorrow. Thanks for all the support!

I see that you have vacated the house, and the bank has taken possession, as evidenced by their changing the locks and securing the premises. I do not see if you filed for bankruptcy, or if you did file, whether you surrendered the house in bankruptcy. If you did not file, then you have that (the threat of possibly filing for bankruptcy) to use as leverage in your negotiations with the HOA and their collection law firm. If you already filed, then you are probably out of luck, because HOA dues, fines, fees, and special assessments which accrue after the petition filing date are not discharged.

In any case, you might consider fighting the lawsuit on the grounds that the bank has taken possession of the property by virtue of the fact that they have changed the locks and secured the premises. Take pictures of the notice posted on the house showing that the mortgage servicer has taken possession of the premises. It could be argued that the only reason that the lender has not foreclosed on the property--despite the fact that they know the house is vacant, and that you no longer have any interest in it--is in order to minimize their costs and maximize your losses. They cannot on the one hand tell you that they own the property and that for you to enter is trespassing, while on the other hand saying that since your name is on the deed you should be responsible for HOA and upkeep costs.

[phsunny]

Our HOA has served us with a summons to appear in court tomorrow 3/27/12 in regard to past due HOA fees as well as a "new street fee" for a street that was redone after we vacated the property and the banks changed the locks (about $2500 total not to mention court fees and late charges). Hubby spoke with the HOA's lawyer last week and asked if the HOA Trustees had shown him the Hardship Letter we had sent them when we left last year. He said no. Hubby offered a few hundred dollars that we have saved up, lawyer said he would run it by the Trustees to see if we can work out a settlement of some kind prior to court.

I hope more folks write in about this and give us their stories, as I think we are still at the beginning of this nightmare with banks delaying foreclosures and HOA's coming after broke ex-neighbors. As it stands for us, we haven't made a payment on that house in 2.5 years and there has been no official notice of a sheriff's sale or anything like that.....meaning our names are still on that damn deed!

I will update you all on what happens tomorrow. Thanks for all the support!

[username123]

Thanks for the post. Definitely scary.

[tobee43]

i just had an additional thought on this articile...it's really odd and i do wonder who's behind such a scare tactic...since the Mortgage Forgiveness Debt Relief Act of 2007 should cover any with a deficiency provided they were insolvent. whether one is in a recourse state or not. so really, i can get the "cottage" business the atty's are drumming up, as a result of all these pending suits, however, many of those in foreclosure whether they went bk or not, if they can prove their insolvency at the time that deficiency was incurred they should be fine. and, if the lender sends out a 1099-A one would except that amount just gets listed on the 982 tax form and should be resolve.

however, on the other hand HOA fees, and costs, some taxes, town and city assessments/liens i do understand can become a burden on the already tapped out ex homeowner. i think we will see more law suits directly at the banks for dragging their feet and causing ex-homeowners to incur additional charges which they had no control over accumulating. (especially if they were insolvent at the time).

should prove to be an interesting subject matter as time goes on.

[tobee43]

If someone wants to live in a restricted community, they should look at one that provides strict covenants. Living under a HOA, along with the fees and politics that go along with it, is sheer folly.

indeed frogger. but i think it depends on what type of restrictions we are taking about here. i know some can tell you what color to paint your house, put a tent up for kids in your backywards!!

we said we would NEVER live in one, and yet, here we are!!! the pro's and con's ...we do like the fact that people must keep up their homes etc. however, we personally didn't want to be "double" taxed..our annual dues are a whopping $125. of course we don't have much but a small tight community. the dues money going to help the community itself, after we all meet and vote...i.e. we helped the family down the road re-paint their house since they couldn't afford it. we have cover dishes and tricky trays and spend the money cutting lawns of some of the elderly etc. so for us, it's worked out great. we used to live isolated up in the mountains, not a neighbor for over 3 miles. so it's kinda interesting to us now.

yet, we saw some HOA's with $350 MONTHLY fees!!!! gates, huge expensive pools to maintain...club houses...i guess for some that's considered "perfect" living.

[frogger]

If someone wants to live in a restricted community, they should look at one that provides strict covenants. Living under a HOA, along with the fees and politics that go along with it, is sheer folly.

[bcohen]

Just another reason I am ever so glad I told my hubby I would NEVER buy a home that belonged to a HOA.

Amen to that. I not only wouldn't BUY a home in a HOA, you couldn't GIVE me one. The way I look at it, when you have an association, you are functionally renting, except you get to deal with the maintenence headaches, pay for insurance, etc. Even worse, in the event that something happens and you need to get rid of the house, you can have a huge debt that continues to accrue, and even bankruptcy might not be able to eliminate.

Also, HOA's sometimes hassle and micromanage residents even MORE than a reasonable landlord would. For example, many HOA's have restrictions on parking commercial vehicles in your driveway, what furniture you can place on your front porch, etc. By contrast, most apartment complexes here provide two free parking spaces per apartment, and you can park any functioning, licensed vehicle--be it a personal car or a work truck. Also, you are free to place whatever furniture you want on your porch or balcony, or even set up a clothesline to air-dry your clothes.

Around here, several HOA's require people to paint their air conditioners to match the exterior of the house, or erect a wall around it, heaven forbid people see that you have air conditioning. This is in a desert climate, where almost everyone would have A/C, not someplace like Alaska where maybe it's not too common.

I am very happy that when I moved here I decided to get a rental apartment, rather than buy a so-called "condominium", most of which were used apartment buildings that underwent minor cosmetic upgrades anyways. The rent is reasonable, the maintenence has been responsive, and best of all--there is no HOA to deal with!

[kjrmom911]

Just another reason I am ever so glad I told my hubby I would NEVER buy a home that belonged to a HOA.

[tobee43]

the laws in my state must be different than florida because in the firm where i work pretty much all of the sellers who are owners after the foreclosure pay all of the delinquent HOA and association dues that are past due right up to closing...and they keep all the properties up to the associations code etc... until the properties are sold too.

oh, i just wanted to clarify what i may have stated, didn't want you to misunderstand...after a foreclosure, our HOA does attempt to go to the homeowner, but, ONLY if they didn't file bk. since we are just beating a dead horse.

however, if someone is in foreclosure and then gets a loan mod or brings their mortgage up to date, then we send out our "collection" letter. our board just decided it was easier if someone vacated the home and foreclosed to just add the costs to the lien, that way we know the bank must clear the lien to clear title when the bank resales the bank. even if they didn't file bk.

our little HOA has just been able to recoup more money that way that going to the ex broke owner.

[IamOld]

I think hoa's are bloodsuckers who do zilch. Useless, and now even more so.

[tobee43]

the laws in my state must be different than florida because in the firm where i work pretty much all of the sellers who are owners after the foreclosure pay all of the delinquent HOA and association dues that are past due right up to closing...and they keep all the properties up to the associations code etc... until the properties are sold too.

yes, i'm in florida too, in our HOA after or if someone goes into foreclosure, we (our HOA) doesn't go after the owner for the past dues, just a lien is put against the property, so it's really that we just add it the bank. if a person goes into bk well, then for certain we would not consider going after him or her.

the property doesn't get the lien removed until the bank pays the back dues, or they can't get clear title to resale the property. we figured why go after someone that can't pay, so far we have collected a couple past due HOA fee, plus interest, etc.

[daxtell]

the laws in my state must be different than florida because in the firm where i work pretty much all of the sellers who are owners after the foreclosure pay all of the delinquent HOA and association dues that are past due right up to closing...and they keep all the properties up to the associations code etc... until the properties are sold too.

[jacko]

Be proactive and quit acting like a victim. Get rid of the checking account and go with a Wal-Mart money card. Put excess cash you do not need in a ROTH IRA which will give you a better return. I have it linked to my IRA and put $100 in it monthly.

[tobee43]

scary!!!!

i do know in NC, for example that can't garnish or freeze you accounts. i have also heard here in florida, there is a MAX, provided one is the main househouse income source.

i knwo that bank account seizures may seem more common than they really are. but, here are rules to follow if someone wants to take money from your bank account. so one can take steps beforehand to make this less of a threat.

know how and when your bank accounts may be within a creditor's reach. uou can then take action, manage your debts, and keep your creditors content and account balances in the black.
who is the account holder?

a collector trying to get money out of your bank account will have a difficult time taking money from any account that isn't in your name. state laws vary widely on the power of creditors to reach funds in a joint account.

"In some states, creditors can reach the entire balance of a married couple's joint account, for example. Some laws look to each account owner's deposits. Some states have joint tenancy laws to protect a married couple's bank accounts from creditors unless both husband and wife are responsible for a debt.
Exempt Funds

Even if the bank account is solely in your name, some funds are exempt from debt collection under state or federal law. The reason is to allow people to preserve funds to meet their basic needs.

Exempt funds keep their status as exempt when you put them in a bank account and they stay readily available for use. Exempt funds can lose that protection if you convert them into a "permanent investment."
Sources of Exempt Funds

Although it varies by state, exempt funds would typically include:

Most government benefits, including Social Security, unemployment insurance, veterans' benefits and public assistance
A percentage of your earned wages, which varies by state
Alimony or child support payments, and other payments for the support of a dependent
Proceeds of the sale of property that is exempt from collection, such as a homestead exemption
Disability or unemployment benefits from your employer
Workers' compensation
Retirement benefits, such as pension or annuity payments
Amounts received due to a wrongful death claim or from life insurance
Payments due to personal bodily injury, in an amount that varies by state
Proceeds of guaranteed student loans

Wildcard Exemptions and Your Choice

Some states allow you a wildcard exemption of property or cash to be used as you see fit so you don't lose all of your money. So if you're forced to disclose your assets in a post-judgment procedure (sometimes called supplemental proceedings or citation to discover assets), tell the debt collector funds are protected as exempt or as a wildcard exemption.

You'll also want to write a letter to the bank ahead of time to let them know that all the funds in a particular account are exempt.
Seizure Process

When the bank receives a notice from the debt collector, the bank must freeze nonexempt funds. This means you can't withdraw the money or use it to pay checks you've written. Act quickly to make alternate payments if you have checks out that could bounce.

When you receive notice that your account has been frozen, respond with written notice to the bank and creditor about exempt funds. It's best if you can show all funds in an account are exempt.

It can be complicated if you have mixed or commingled exempt and nonexempt funds. When you know there may be a judgment against you, try to plan ahead and keep exempt funds in a separate account.
Protecting Your Exempt Assets
Separate Exempt Funds

Planning to protect exempt funds is a good idea and can save you time and effort if there's ever a judgment against you. Designate accounts for your exempt funds, and immediately inform the bank and creditors of that status if collection efforts begin. If the account is nonetheless garnished or set-off, you may have a legal claim against the creditor for wrongful garnishment.
Act Quickly on Frozen Funds

Many courts allow you a formal hearing to explain why the frozen funds shouldn't be seized or garnished. Check the seizure notice for instructions to challenge the seizure or with the clerk of the court where the judgment was entered. Act quickly to restore access to your accounts and minimize consequences such as bounced checks.

It's important to provide detailed documentation that the funds in the account are from entirely exempt sources. For instance, you might provide:

Bank deposit slips
Paystubs
Statements from government benefit agencies
Statements from insurance companies
Real estate closing statements
Pension or annuity statements
Bank account statements and registers
Any other documentation to trace the source of funds as exempt

It's best to provide the detailed documentation to the debt collector and the court ahead of time, in as clear a manner as possible. "


again SCARY stuff!