Yes, it’s the old American Flag dispute again. Across the country homeowners have been winning disputes when the HOA lawyers decide flags are illegal. But states have begun passing laws to keep the HOA lawn Nazis from hassling patriotic homeowners.
The dispute in Forrest Lake Townhouse Association in Texas flag involved veteran Billy Martin. He complained to the board the community flag was looking tattered. They did nothing to improve things so he put up his own flag to display Old Glory.
The HOA began fining him two hundred bucks a day. Two years earlier, after another HOA ordered a homeowner to rip down his flag, the Texas legislature passed a law saying flying the American flag was a right, even in Homeowners Associations.
THE LAW IS ALREADY ON THE BOOKS! So why is this new Homeowners Association challenging the law?
In the story linked below you’ll see a completely frivolous lawsuit and the lengths the lawyers are going to stretch out their case and build up their billable hours.
I’ve predicted for several years that Homeowners Associations would eventually start using drones to increase their ability to spy on the tiniest infractions by HOA members.
Because HOAs are generally unrestricted by laws or ethics they get away with some really crude privacy invasions. With incredibly inexpensive flying nightscope cameras that means no outdoor hot tub or upstairs window is off limits to them.
California Senator Diane Feinstein is concerned. She’s involved in hearings on privacy invasion and had a personal experience with a drone peeking into her window during a demonstration outside her home.
Feinstein thinks there have to be some federal regulations governing drone use. She might even be able to get a law passed. But until HOAs have to obey the kinds of laws that all other Americans have to obey, you’re going to see these kinds of privacy invasions skyrocket.
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.
I’ve long predicted that Homeowners Associations would soon be using drones to intrusively invade the privacy of homeowners. The mesmerizing video linked below was taken over Niagara Falls and it shows the incredible capabilities of the new drones and digital video.
As you watch this, keep in mind that these cameras and drones are now well within the budgets of all HOA board members and management companies. With the massive amount of abuse that happens in HOAs across America, you don’t have to work too hard to imagine how this technology could be used.
I recently spent eight long days in Wichita at the federal courthouse observing the pre-trial hearing of an HOA lawsuit where a Homeowners Association board member attacked and severely beat a homeowner with a crow bar! These six photos, taken at the hospital, show the viciousness of the attack.
It seems the homeowner discovered work being done on a neighbor’s condo that also happens to belong to the mother of an HOA board member. While others had been on a long waiting list to have their work orders completed, the board member opted to make his mother’s condo top priority over everyone else. The homeowner took his camera and phone to the nearby common area and proceeded to document this “special treatment.”
The board member saw him taking pictures while looking out his condo window, grabbed a crowbar from his garage and started clobbering the camera holding homeowner. The homeowner did not fight back. Obviously, one man was taken to the hospital by ambulance and the other went to jail!
Surprisingly, the District Attorney declined to press charges. The injured homeowner proceeded to file a civil suit in federal court. And as bizarre as this sounds, the HOA members, not their insurance company, are paying all the legal bills because the board member claims his actions were part of his “official duties” as a board member. The legal bills are already estimated at more than $200,000 and the case hasn’t even gone to trial yet!
The homeowner who was beaten began sending emails expressing his anger and frustration with the board of director’s conduct. He did not send any to the defendant. He admitted to the judge that it wasn’t one of his better moments when he attached the somewhat crude “Revenge Song” by Miles Betterman. The HOA board’s legal team actually played that YouTube song in the courtroom, claiming it amounted to a “death threat” to a board member. Give me a break!
The board is seeking a court-ordered injunction to take away this HOA member’s First Amendment rights to communicate with his neighbors. The board also created an HOA “no call” list and they fine this homeowner $100 for every email he sends. The U.S. Constitution be damned!
The community is divided with supporters and haters on both sides. This community has been plagued with lawsuits causing property values to plummet. Even more dramatic, the HOA members have installed security cameras aimed at every nook and cranny of this neighbor’s condo. They even have them installed in their cars!
One other interesting note: While being interrogated about life in this Kansas Homeowners Association, the board member on the stand was asked about a suicide committed by a female resident of the HOA. The woman reportedly had told neighbors she could no longer take the harassment from this particular board member. She hanged herself from a tree right next to the entrance sign to this HOA. I was stunned: When questioned under oath about this tragedy, the board member chuckled.
Dear Readers, let me take you by the shoulders and shake you until you totally understand the madness that’s happening in American HOA neighborhoods!!! “Love thy neighbor” is a completely dead commandment when it comes to life in an HOA!
Insanity!
I cringe to think of the special assessments these HOA homeowners are going to have to fork over when the dust clears. If this homeowner wins a sizeablelawsuit over the crowbar beating or the invasion of his privacy….put a fork in it…this HOA is done!
This story is so sickening, that I’d like to close with the only amusing part of the pre-trial hearing. It involved the HOA attorney and happened on Day 2.
The HOA attorney is very large with a girth that rivals that of Governor Chris Christy. Can you envision that image? While standing at the lectern and questioning a witness his suspenders came loose letting his pants drop down to the floor on one side while he was gripping the other and still questioning the witness. The judge didn’t see it, but those of us in the gallery sure did! Priceless! I nearly burst my lungs trying to keep from laughing out loud!
(Editor’s note:)
Please help this story go viral. Every homeowner in America should read it. Send it to everyone on your email list and ask them to do the same. Send it to your friends, and make the same request to keep it moving throughout our country.
I’m including a link to the song that was actually played as evidence in this Federal Court of law in the case described above. If you are easily offended DO NOT click on the link. If, however, you do listen to the song, just keep in mind that it was introduced into the U.S. District Court record by a well-known Kansas Homeowners Association and its attorneys and is now part of the official court record. Actually, this song could eventually become the national anthem for the anti-HOA movement. Bizarre.
