guest blog by Deborah Goonan
CAI makes it abundantly clear they oppose federal regulation of HOAs. Yet the HOA industry has relied heavily on federally backed mortgage financing to support a behemoth HOA housing empire created of, by, and for Developers.
The height of industry hypocrisy is made apparent when we take a close look at federal legislation that the HOA industry promotes before our Congressional leaders.
CAI recently conducted its “August 2014 Recess Advocacy Campaign,” where members were urged to meet with Congressional leaders in their respective District (local) Offices.
CAI is currently focused on three key federal issues. Let’s look at each one, using CAI’s own words, my emphasis added in italics for clarity.
1) Mortgage finance reform
CAI’s goal is to ease access to federally backed mortgage financing. Congress is planning to replace Fannie Mae and Freddie Mac with a new finance system that will likely be more dependent on private lenders with potentially diverse (strict) lending standards. CAI members are instructed to remind Congress that the “current national standard for community associations has reduced complexity and duplicative work by associations when providing information to mortgage lenders. Eliminating community association standards will drive up association cost, create confusion, and lead to impractical requirements that interfere with the responsibilities of association boards.”
2) Disaster relief fairness
CAI laments that Association insurance policies do not always fully cover repair costs after natural disasters, and reasons that HOAs should be eligible to receive FEMA disaster relief because, “Residents of community associations should be treated equally with all other taxpayers … Owners in community associations must likewise receive the same federal benefits as all other residents within a local jurisdiction in the aftermath of a natural disaster.”
3) Amateur radio parity in associations
“CAI opposes unnecessary federal intervention in the operations and governance of community associations… Community associations do not need an Act of Congress to work through differing points of view that are simply best settled by neighbors talking to each other.”
Take note of CAI’s interesting perspective for protecting the rights of HOAs. But are these advocacy efforts beneficial to HOA owners?
Historically, loose mortgage standards have led to high default rates, and failure of Fannie Mae and Freddie Mac, which has proven to be more harmful than helpful to HOA owners. CAI seeks FEMA benefits for HOA common areas that lack adequate insurance coverage and protective measures such as surge protection. They do not advocate for FEMA relief for individual homes or units. The more important concern should be why are so many HOAs lack inadequate insurance protection in the first place? The odds of squeezing funding out of a cash-strapped FEMA for HOA common areas is slim to none, particularly since FEMA views corporate HOAs as businesses. (I wonder where they got that idea?)
Now, let’s examine the People’s perspective. Why do advocates seek federal legislation aimed at HOA reform, and improved alternatives to HOAs? Why support federal standards and oversight?
First, federal standards would reduce complexity and confusion that results from a mosaic of ever-changing statutes across the country. Furthermore, mandating national democratic governance standards tied to Constitutional rights will prevent individual states from enacting state-level legislation that primarily serves the interests of the local real estate industry. If state-level advocates exchanged notes on what policy works and doesn’t work, it could save potentially millions of dollars spent on lobbying for or against potentially harmful or ineffective legislation.
As advocates, we seek equal justice under the law, on par with other taxpayers. Are HOA residents not entitled to the same federal benefits of the Constitution through the 14th amendment, and under the same Bill of Rights as the rest of our fellow Americans? Are we, as individuals, not entitled to consumer protection in the form of policy that holds HOA leaders accountable to the people? After all, we pay taxes just like our counterparts that do not reside in the HOA regime! We should be treated equally!
And, recall that it DID take an act of Congress to remind HOAs that Americans have the right to display our country’s flag. Yes, Congress passed the American Flag Act of 2005, a law that some HOAs still flagrantly ignore and manipulate by creating twisted rules under the dubious authority of a “contract.” Disputes still occur with the neighbors that should be able to settle disagreements by simply talking to each other. After all, homeowners and HOAs never need to hire a $400-an-hour attorney to settle those differences, right?
With CAI lobbying at the Federal level, it becomes even more important that HOA Reform advocates do the same.