Category Archives: embezzle

Shake-Up in Holly Lake HOA in Florida‏

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guest blog by Deborah Goonan

Bob Norman of Channel 10 has taken on yet another rogue HOA in Florida.

One of the oddities of some HOAs in Florida is that the Board of Directors retains the authority to screen and reject buyers and tenants. But what are the criteria used to arrive at those decisions?

The “HOA screening” issue has been a contentious one in Florida, as many would-be buyers or tenants have sued or filed formal complaints of discrimination.

For example, last year, one Venice HOA enacted restrictions for unmarried couples seeking to buy or lease a home! The Board claimed the July 2013 amendment was an erroneous oversight, but has never offered a reasonable explanation of how or why the single-people-or-married-couples-only restriction was approved. The media picked up on the outrageous restriction, and that prompted the HOA to amend its declarations to eliminate the discriminatory restriction.

Holly Lake HOA, located near the Everglades in South Florida, is the latest site of buyer-tenant review controversy. But this one involves a Board member apparently profiting from his position. It seems that Board Treasurer Paul Morales has been approving plenty of applications to purchase (or lease) units, but nearly all of those buyers have been family members and business affiliates. Meanwhile, it has been alleged that other buyers or tenants lacking direct ties to Morales have been rejected without satisfactory explanation.

Bob Norman’s review of public records seems to support those claims. Check out the video report. HOA members are calling for a criminal investigation, and have put pressure on Morales and colleague Ed Patton (President of the Board), prompting both men to choose not to run for reelection for the Board. Coincidence?

Another bit of irony: Florida Statute stipulates that convicted felons cannot serve on the Board; however, it does not require background checks for Board candidates. Yet Florida Statute fully allows Board to screen and background check their tenants and buyers! Talk about a double standard. Guess what? It just so happens that Morales faced federal charges in 2000, involving a past real estate deal – charges that were mysteriously dropped.

As usual, requests for access to financial records have been ignored, and one owner has been harassed for daring to ask questions. Also predictable, although the conflict of interest seems obvious to anyone with two active brain cells, there has not been any determination of illegality.

Link to Channel 10, Bob Norman, Holly Lake HOA story

link to Herald Tribune, Casa di Amici COA story on amendments to restrictions

When it comes to collection of HOA liens, it’s all about the money!

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guest blog by Deborah Goonan

The latest controversy in HOA Land: in Nevada – and by extension 21 other states with similar legal status – the HOA super priority lien can now extinguish an outstanding mortgage backed by the Federal Housing Finance Agency (FHFA).

It’s ironic, because when CAI was founded back in 1973, it was with cooperation from FHA. Their agreement to back mortgages in common interest developments was the glue that held disparate CAI interests together.

But after years of mortgage deregulation, followed by out-of-control real estate price increases, and the ensuing mortgage default crisis, things have certainly changed.

Now it’s very difficult to obtain mortgage financing for condos, and not that easy for detached single family homes either. In the 22 states that have enacted priority lien status for HOA assessment liens, mortgage financing just became a great deal more difficult to obtain.

In early December, CAI boasted about its Nevada Supreme Court victory, where the court ruled that the FHFA backed-mortgage lien is extinguished following the HOA’s non-judicial foreclosure to collect unpaid assessments.

But a few weeks later, FHFA has fired back, vowing to fight in court to invalidate HOA foreclosures that wipe out taxpayer-financed guaranteed mortgages.

CAI claims that FHFA is “bailing out mortgage servicers” and vows to fight for the rights of HOAs to maintain super priority lien status.  CAI’s statement presents the usual argument that the owners that can afford to pay assessments have to cover the costs for owners who cannot or will not pay.

But at issue for FHFA is the fact that HOA foreclosures can now wipe out entire mortgage interests, at dollar amounts that far exceed state super-priority lien allowances of 6, 9, or 12 months unpaid assessments.

The super-priority lien, CAI argues, is a means to motivate mortgage servicers to either speed up the foreclosure process or pay the HOA’s lien prior to or at its assessment foreclosure sale.

It is interesting to note that the Nevada Supreme Court was split 4-3 on whether a judicial foreclosure is necessary in an attempt to wipe out the mortgage lien, citing due process rights to redemption for owners and mortgage lien holders.

It seems clear that FHFA will not sit idly by, allowing HOAs to beat them to foreclosure and wipe out mortgage interests. FHFA has filed action in Nevada Federal court because, in its own words, it “has an obligation to protect Fannie Mae’s and Freddie Mac’s rights, and will aggressively do so by bringing actions to void foreclosures that purport to extinguish Enterprise property interests in a manner that contravenes federal law.”

Will FHFA challenges lead to statutory mandate of judicial (vs. non-judicial) foreclosure of HOA liens? Will increased legal costs and lending risks lead to higher costs for borrowers, including escrow of 6 – 12 months assessment fees?  Or will FHFA push for elimination of HOA super priority lien status? These are interesting times.

Given the history of more than a few HOA attorneys to abuse the foreclosure process in order to evict owners and acquire homes with high equity (little to no mortgage balance owed) at the HOA’s auction sale, the recent NV Supreme Court decision is unsettling, to say the least.  If first mortgages can be wiped out following HOA foreclosure, doesn’t that create additional moral hazards?

CAI-HOA corporate interests will duke it out in court with FHFA. And while HOA homeowners may “win” the relatively small battle for collecting a portion of unpaid assessments upon mortgage foreclosure, they will probably lose the war for preserving property values, if homes are allowed to sell at HOA auctions for pennies on the dollar, or if FHFA pulls the plug on favorable financing terms.

CAI press release – Win on Priority Lien Case in NV

Statement from FHFA on Super-Priority Liens

CAI press release – FHFA Move Threatens Homeowners and their Communities

SFR vs. US Bank, NV Supreme Court Decision

It’s Happening All Over!

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Our guest blogger, Deborah Goonan first wrote about this HOA several months ago. But it’s so nightmarish and such a good example of how damaging HOAs can be to your mental and financial health, it’s worth dragging out again. These homeowners in a collapsing HOA in Virginia’s Historic Triangle will never be able to solve their problems.

GetAttachment

Homeowners who bought into Riverwalk Townes are beginning to learn how stupid they were. Just a few years old, the Homeowners Association is suddenly deciding that fundamentally bad construction cannot be corrected by suing the builder. Now they’re having to turn to York County to see if their unfinished subdivision can be finished at taxpayer expense.

Street lights don’t work, roads are unsafe, drainage systems are falling apart. The roads aren’t properly crowned so rainwater flows down the middle of the streets, two foot wide trenches crisscross yards which actually isn’t a bad idea if you’re a fisherman looking for worms.

But the real worm is the developer, Gary Sheppard of Sheppard, Hale & Associates, now one of Virginia’s most well-respected builders.

Didn’t anyone warn these homeowners that they were stupid to buy into the HOA concept?

Wouldn’t our founding fathers be proud? So proud.

(link to Riverwalk Townes building fiasco)

 

HOA Embezzling Comes to Bakersfield

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Because it’s Christmastime, we usually expect a little more embezzling by employees of Homeowners Associations. Michelle Haughton, the accounts receivable employee for the Bear Valley Springs HOA apparently took the word ‘receivable’ a little more literally than her job description intended. The cops won’t say how much money was missing, but it’s greater than $2000. She’s now charged with embezzlement and grand theft.

It won’t matter much to homeowners. They’ll just see a special assessment come along and no one on the board will tell them them what it’s for.

(HOA embezzlement arrest in Bakersfield)

 

A Handicapped Youngster? Screw ’em!

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Great guest post by Dave Russell yesterday, good enough that I’d like to add to it.

Around the country, Homeowners Associations continue to wildly discriminate against families with handicapped youngsters. They’re shunned, they’re fined, they’re labeled ‘bad people’ who aren’t allowed to use the common areas. These stories are as disgusting as they are endemic. And they should serve as a warning to any potential home buyer that HOA property is fundamentally diseased, unfit for Americans who believe in human rights.

Yes, H.U.D. occasionally comes to the rescue on behalf of a damaged family. But these federal lawsuits are so rare they can, at best, be described as ‘show trials’ similar to the massive HOA racketeering case now being conducted in Nevada. A show trial is exactly what it sounds like. The feds ride onto the scene like rodeo cowboys, crack a few whips, and hope that other criminals across the country will be deterred from committing similar crimes. They never are.

The only solution to human rights violations by the HOA system is federal fines massive enough to stagger the imagination. Under the current system the feds win an occasional lawsuit, the HOA insurance company pays for the lawyers and fines, and the homeowners never have a hint about what really happened.

How to solve the problem? When an HOA commits an ongoing violation of federal law confiscate the entire neighborhood under public nuisance laws. Every house, every family gets evicted without compensation.

Outrageous, you say?

Impossible and illegal you say?

Hey, just look at a 2006 Supreme Court decision called Kelo. The government essentially confiscated an entire neighborhood simply for the crime of “not looking nice enough.” Actually, there was some underlying corruption there. A pharmaceutical company wanted the neighborhood for a construction project and the state gave it to them. The irony is that the drug firm decided they didn’t really want the land after all. Now this former neighborhood is just a field of weeds.

Maybe what this country really needs is a few more weeds.

(link to story on cerebral palsy family driven from Kentucky neighborhood)