Home Owners Associations are enduring a major budget crisis because so many delinquent homeowners are also delinquent on their HOA dues.
Today's featured property is scheduled for Trustee Sale on April 5, 2010. Will the short sale process in time?
Irvine Home Address … 4 Windrow, Irvine, CA 92618
Resale Home Price …… $446,879
{book1}
But we’re running through the fire
When there’s nothing left to say
It’s like chasing the very last train
When we both know it’s too late (too late)
You can’t play our broken strings
James Morrison — Broken Strings
People want to play even if they have broken strings. Many money renters squat in homes they are not paying for. They fail to pay their home owners association dues as well as their mortgages, but they still want access to the facilities as if they were current on their dues.
I first discussed Home Owner Associations, HOAs, in the post I Want My HOA.
Homeowners associations are formed to maintain facilities in common ownership, and to maintain property values in an area through the enforcement of covenants, conditions & restrictions (CCRs). It has been shown, painfully, that individuals acting without governance will allow their properties to deteriorate, appropriate public spaces, and express their individuality in ways which harms neighborhood values (anybody remember the clip below from Cheech and Chong's Next Movie?).
Later, with help from Gus Ayers, the IHB published this post: Ownership Cost: Homeowners Associations. That post has a detailed discussion of HOA related matters.
Today, we look at how Florida has cracked down on owners who are not paying their HOA dues.
Homeowner association blocks guests when fees go unpaid
Melissa Solis said she understands that she can't use her community pool or clubhouse because she's late paying her homeowner-association fees.
But it's unfair, she said, that security guards at the gated entrance to her neighborhood prevent her friends, family, babysitter and even the delivery man from Winter Garden Pizza Co. from getting to her home. They wouldn't even allow her mother-in-law inside the gates for a family birthday party.
Instead, she has to meet her visitors outside the community's entrance, pick them up and drive them inside in her car. Unlike residents who are current with their fees, even Solis cannot enter through the automatic gates; she must instead get the guard's approval to access her home.
"I think it's more them trying to humiliate us," said Solis, who works in food services. "It's very embarrassing for our daughter. She's 10 years old, and she doesn't understand that the economy is tight and Daddy doesn't have a job."
[Melissa Solis, who lives in Stoneybrook West, says she feels like the homeowners association is trying to humiliate her for not paying overdue fees. (GEORGE SKENE, ORLANDO SENTINEL / March 16, 2010)]
Unfair? She isn't paying her share of the maintenance for the facility. Why should she be able to use the facilities? It is only her sense of entitlement that makes it seem unfair.
How many of you who regularly get Disney passes didn't do so during the recession? Should Disney continue to let you in the park?
Stoneybrook West's guard-shack standoff underscores the mounting frustration of homeowner and condominium associations in the Orlando area and across Florida. Many associations face mounting delinquency rates of 30 percent to 50 percent, in a state with one of the highest foreclosure rates in the country. As state legislators meet in their annual session this month and next, they will consider several bills designed to ease the financial woes of homeowner and condominium associations.
One bill, filed by state Sen. Mike Fasano, R-New Port Richey, would allow associations to suspend residents from using common areas if they are three months or more behind paying fees. It also empowers associations to collect fees from renters, and prohibits association members from serving on the board if they are three months delinquent.
I don't think they thought this one through; if you were a renter, and if you were approached by a representative from your landlords HOA and asked to pay, what would you do? After I finished laughing, I would either move, or pay the fee and deduct it from my rent. If the deadbeat landlord had the nerve to complain, I would point out their breach of contract and move — I might even sue for damages.
"These homeowner associations are crippled, and they're looking for any kind of edge," said Sarasota lawyer David Muller, co-executive director of the Community Association Leadership Lobby, which represents more than 4,000 associations. "But actually preventing a guest from accessing the gates — that's something that's going a little too far, in my opinion and when concerning the statutes."
But the law is on Stoneybrook's side, said Orlando lawyer Jim Gustino, who represents the 13-community golf-course development in Winter Garden. State Circuit Judge Thomas B. Smith ruled last year that the association for sister development Stoneybrook East, in east Orange County, could restrict guest access for residents who are 90 days late making payments and who were given the chance to start a payment plan.
"We have to bring whatever lawful pressure that we have to bear on these folks. No one feels good about it, but it does result in collecting money," Gustino said. "Many folks will, by some miracle, come up with the money they couldn't come up with before, because they don't want their family members to be denied entry."
As a result of such actions, Stoneybrook West's delinquency rate is 5 percent or 6 percent, Gustino said, but only because it has been aggressive in keeping residents up to date. Dozens of homeowners who face financial hardships have entered into payment plans, he said.
"If you don't take an aggressive enforcement position, you will discover you will be ignored," the lawyer said. "Associations try to be nice to people and try to be more accommodating than Stoneybrook West is with its people and, as a result, those association are in distress. They have to increase dues and, as a result, they have more defaults."
I can understand their pressures to get people to pay. HOAs do not have outside sources of revenue, so people who do not pay get a free ride on everyone else. 
Stoneybrook's actions did raise some concerns among lawyers and other individuals who cited Florida statutes that require associations to provide access to their residents.
Veteran homeowner-association board member Hobie Fisher, who serves on two boards for the Avalon Lakes community in east Orange, said his board have been actively taking over properties in foreclosure. But prohibiting access to residents' guests, he said, is going too far.
"I think that's wrong. You can't deny people the right to come in there. You can't deny people and their guests the right to property," Fisher said.
Stoneybrook's prohibition of certain guests also raises concerns about gated communities. Fisher, half jokingly, said such subdivisions should just charge visitors a small toll to help underwrite community expenses.
The idea is good although impractical. If Ms. Solis is embarrassed now, how will she feel when her mother is charged $1 to visit?
Solis said her view of living behind gates has changed since the blockade began keeping her friends and family at bay.
"I moved here thinking, ‘A gated community, how nice,' " she said. "If I knew then what I know today, I would have never gotten into a gated community."
What would happen if we did this here in Irvine? We have dozens of gated communities and most of our facilities in open communities are gated. We would quickly find out who isn't paying their dues….
Gustino said the very expense of operating a guarded-and-gated entry makes it imperative that all residents pay their fair share of those security costs.
Solis estimated that she is behind about $1,400 on her association fees. She said she would like to get current, but her family's budget has been cut due to her husband's unemployment. She said she has been tolerating the gate situation for more than a year before she got fed up this week and decided to speak out.
"You know, I'm not going to back down because they try to intimidate you," she said. "At least I'm going to hold my head up."
Perhaps some attorney will take on a case like hers to attempt overturning the Florida ruling, but other than that, I don't see what this woman can do about her exclusion.
Mary Shanklin can be reached at mshanklin@orlandosentinel.com or 407-420-5538.
MORE FALLOUT FROM HOUSING'S MELTDOWN
Mind paying HOA dues for empty homes? Empty Homes Mean Others Pick Up Tab
What do you think about this practice? Should squatters who are not paying their HOA dues have continued access to the facilities?
Ideal Home Brokers and Financed Trustee Sales
Since we launched our Trustee Sale buying service in January, we have been exploring methods of structuring a deal with various hard-money lenders. We have lined up two sources (which isn't enough) and we are now able to put financed buyers into Trustee Sale properties. Today's featured property may sell to a third party at auction on April 5. Thanks to 5% interest rates, recent comparable sales value the property at $460,700.
If a buyer steps forward and puts 3% down on a $446,879 purchase price, our hard-money capital partner will authorize us to go to auction and bid on the property. In the event we are the successful bidder, the property is automatically in escrow with the buyer who placed the down payment. We are discounting the property 3% from comparable sales because we don't have the uncertainty and market risk of searching for a buyer. The deal is attractive to the hard money lenders because they have very little risk when a buyer is already in escrow, and the offer is attractive to buyers because they obtain a discount from comps, and they have exclusive access to a market other financed buyers cannot access.
This isn't a negotiation. Based on the requirements of our hard money lender and the other costs in the deal, that is the price we must charge to make the deal work. Someone has been waiting on this property as a short sale, and the lender may approve the short before April 5, but if not, there is an opportunity to get this property at auction.
Next week, we will have a series of posts outlining the details of this offer, and for the remainder this week, I a profiling more eligible properties (anything under $600K). In short, we can put financed buyers into Trustee Sale properties at a 3% discount to comparable sales.
Featured Property
Today's featured property was first profiled last year in the post Dust in the Windrow.
Irvine Home Address … 4 Windrow, Irvine, CA 92618 
Resale Home Price … $446,879
Home Purchase Price … $530,000
Home Purchase Date …. 11/9/2004
Net Gain (Loss) ………. $(109,934)
Percent Change ………. -15.7%
Annual Appreciation … -3.1%
Cost of Ownership
————————————————-
$446,879 ………. Asking Price
$15,641 ………. 3.5% Down FHA Financing
5.05% …………… Mortgage Interest Rate
$431,238 ………. 30-Year Mortgage
$93,058 ………. Income Requirement
$2,328 ………. Monthly Mortgage Payment
$387 ………. Property Tax
$93 ………. Special Taxes and Levies (Mello Roos)
$37 ………. Homeowners Insurance
$183 ………. Homeowners Association Fees
=============================================
$3,029 ………. Monthly Cash Outlays
-$385 ………. Tax Savings (% of Interest and Property Tax)
-$513 ………. Equity Hidden in Payment
$31 ………. Lost Income to Down Payment (net of taxes)
$74 ………. Maintenance and Replacement Reserves
=============================================
$2,235 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————–
$4,469 ………. Furnishing and Move In @1%
$4,469 ………. Closing Costs @1%
$4,312 ………… Interest Points
$15,641 ………. Down Payment
=============================================
$28,891 ………. Total Cash Costs
$34,200 ………… Emergency Cash Reserves
=============================================
$63,091 ………. Total Savings Needed
Property Details for 4 Windrow, Irvine, CA 92618
——————————————————————————–
Beds: 3
Baths: 2
Sq. Ft.: 1450
$/Sq. Ft.: 328
Lot Size: 2,739 Sq. Ft.
Property Type:: Residential, Single Family
Style: Two Level, Contemporary
Community:: Orangetree
County: Orange
MLS#: S597251
Source: SoCalMLS
——————————————————————————–
Best of both worlds. .. detached homes with low maintenance yards and HOA ammenities . .. less land but well used so yard and patio are enclosed for privacy while grassy front yard is rolling lawn maintained by HOA. Living room with vaulted cathedral ceilings has double patio doors overlooking the rose garden and yard. Spacious kitchen has remodeled Euro-style cabinets with big island cooking area and breakfast bar. Direct access to laundry in garage and dining room/family kitchen with corner windows onto yard. Master suite is the only room perched above overlooking living room and corner windows over the yard. 2 Bedrooms down and next to bath. One has double door entry for use as work at home office or den or library.
ammenities?
This owner paid $530,000 on 11/9/2004. He used a $424,000 first mortgage and a $106,000 down payment. On 7/30/2007 he managed to get a HELOC for $98,055 which withdrew most of his downpayment (and earned him a HELOC abuse grade of D). Having obtained what he could, he defaulted in early 2009:
Foreclosure Record
Recording Date: 12/30/2009
Document Type: Notice of Sale (aka Notice of Trustee's Sale)
Recording Date: 05/22/2009
Document Type: Notice of Default
So… the sale price to the final buyer is set by the IHB comparable sales analysis -3%? What does that mean in terms of a bid at auction? Who, exactly is buying it at auction?
Are you taking into account the condition of the property in the comp analysis? If so how?
I don’t know, 3% off for all the risks of an REO? Is there an inspection clause? It just doesn’t seem like enough of a discount, so I can see why your hard money lender thinks this is a great idea.
“What does that mean in terms of a bid at auction?”
We subtract all costs associated with the transaction to determine the maximum bid price. We may or may not be successful at auction.
Who, exactly is buying it at auction?
The hard money lender is buying the property and they are on title during the holding period. It is a trustee sale flip, but the hard-money lender gains the assurance of sale at a specified price.
Are you taking into account the condition of the property in the comp analysis? If so how?
If we cannot see the inside of the property, we assume it needs cosmetic renovation, and we allow for that in the maximum bid price.
I don’t know, 3% off for all the risks of an REO? Is there an inspection clause?
There is no inspection clause that allows the buyer to change their mind. We operate like a builder. Builders don’t like to build on speculation, and hard money lenders do not want market risk either.
We will obtain a third-party inspection after acquisition, and we will do whatever is required by the report. The risk is on the hard-money lender. If we have budgeted money for renovation — which is usually the case — then this money is withheld until the renovation is completed per specifications.
Some will consider a 3% discount sufficient, particularly since it will be cosmetically renovated prior to move in. What is their alternative? If people believe they can negotiate a better deal with another seller, that is their choice. Not many other sellers offer property under comps. We offer under comp price assurance, cosmetic renovation, and access to properties no one else delivers.
That inspection clause is pretty good. The alternative for the buyer is to work harder on obtaining a short term loan themselves, but this assumes the total risk of serious defects. Whereas if the hard money lender has to repair anything in the inspection report, they are effectively spreading the REO defects risk over more than one buyer.
I would say that any market that requires this level of work just to find a house, and where 3% cheaper is going to make or break it for you, is one in which you shouldn’t be buying. Supply has got to be really tight for this strategy to make sense.
“Whereas if the hard money lender has to repair anything in the inspection report, they are effectively spreading the REO defects risk over more than one buyer.”
Exactly. If a catastrophe is discovered between Trustee Sale and resale, the buyer simply will not close, then it becomes a battle over the deposit. I don’t want to see IHB buyers get hurt or caught up in those battles. The risk of hidden defect or judgment lien is assumed by the hard money lender — which is also why they require potential upside at auction to compensate them for additional risk.
“Supply has got to be really tight for this strategy to make sense.”
That is one of the main reasons we are exploring this option. If lenders were foreclosing and providing the necessary resale inventory, buyers would have plenty of options, and the need to unite hard-money lenders and eager buyers would be small. Right now, the biggest frustration among buyers is the lack of available inventory because so much of it is either shadow inventory or short sale inventory which doesn’t transact.
Our hope is that people will come to see us as resale builders because we will provide move-in ready properties for escrowed buyers just like builders do. Like builders, we have no desire to build or renovate on speculation, but unlike builders, we have no pressure of overhead or capital tied up in land to force us to speculate to feed the beast. If we are seen as resale renovators delivering a consistent product in a timely manner under comps, we should do well even when inventory is not as big an issue as it is today.
One of the best “flippers” around me in DC, is Capital Investments LLC. They take on the risk of not being under escrow at purchase, but given that they consistently price under comps it’s not a big risk. Their updates are cosmetic and annoyingly consistent regardless of house architecture, but they do a good job.
Your idea is kinda like that but with less risk for the hard money lender.
You finally made an aggressive move to monetize this blog.
I would tend to agree, “3% discount” (whatever that truly means) is hardly worth while for this type of transaction.
Ring the bell folks, it’s time to live the dream in the fascist rate race of Irvine. Prices have bottomed.
Good luck to you and your endeavor, Peace.
I would think that the way to make this worth your while – as the person wanting to actually buy the house – would be to share some of the profits if the house sells more cheaply at auction. For instance, the first 10K under the maximum purchase price could go to the hard cash buyer, and after that, the parties could divide the profits equally. That is, for every $500 less at auction, the purchase price is reduced by $250. (I think a pure rebate might be problematic for the laws governing settlement). That would provide me with a significant incentive. It’s 3% under, with the possibility of more.
“That would provide me with a significant incentive. It’s 3% under, with the possibility of more.”
The difficulty with that one is finding a hard money lender to play along. The maximum bid price is established by the lender’s requirements, but much of the reason people with cash want to play is because they know they may obtain a windfall at auction if there is price improvement. Since I have already removed the possibility of the property selling at or above comps, price improvement at auction is the only potential upside a hard-money lender has. If I remove that, the cost of money will go up, bids will go down, and successful acquisitions will be rare.
I don’t agree with that practice; I could see restricting access to pools or clubhouses, but denying guests entry?
Yet another reason to avoid HOAs. I like freedom. If I’m going to be bound by the rules of a HOA, I may as well rent a house.
It’s a funny story but kind of ridiculous. If these deadbeats don’t want to pay their HOA dues then slap them with a small claims lawsuit or charge them a bunch of penalties and sell the debt to a collection agency. Garnish their wages. There are ways of going after people to get them to pay up. Blocking guests from coming and going just exposes them to liability if the cow of an owner stubs her toe on the gate because she was “being harassed” by her HOA. Not worth risking it on these folks.
As much as I dislike HOAs, they do serve a purpose. Having HOAs means less freedom. They’ll dictate to me what color to paint my house and how to decorate my front yard. Loss of freedom, I know.
However, it’ll also prevent your neighbor from decorating his lawn with cars on cement blocks, or the neighbor from Lady Gaga school of design.
HOAs are double-edge swords.
I go back in forth on my reaction to these tactics. Barring non-payers from voting or using common facilities, absolutely reasonable. Turning off transponders, fine. Barring guests from the gate… I don’t know. It seems a little overly humiliating. But on the other hand, these owners chose this community knowing they were expected to pay their share of the security costs. There’s something ironic about people who wanted to live behind walls to keep out the riff-raff, yet ended up becoming the lower-income types that the community was designed to keep out.
Yeah for some reason this doesn’t pass the “smell test” with me at least. Banishing someone from the pool, park, BBQ, actual amenities, etc…makes sense. This seems akin to blocking off the street because someone didn’t pay their property taxes on time.
Locking someone out of Disneyland, shutting down someone’s AMEX, or heck even disabling someone’s car for nonpayment makes sense to me…this doesn’t.
I used to be prez of my HOA, but we weren’t gated and didn’t charge enough to employ guards. The HOA fee is the first thing not to be paid, as it doesn’t affect one’s credit score. The usual recourse in case of fee defaulters is, as AZDavid says, fines, lawsuits, and in the event that these don’t make them cough up, eviction. (It was a co-op, so we may have had more recourse than a condo association.) We’d eventually get our money from escrow when the unit sold to the next buyer. But none of these has any teeth in the face of widespread unemployment, falling house prices and massive rises in inventory. So maybe this association is on to something – it’s painful for Ms. Solis, but it’s also an object lesson to all other residents, and reminds them that they are in fact paying for services when they send in that monthly fee.
I am a long-time resident of Northpark, which is a guard gated community. I read in our association newsletter that the board is considering deactivating the gate transponders for residents that are very late with their HOAs dues. They will be required to use the guest access, which, on average, will require maybe another 1-2 minutes to talk to the guard before they enter. It’s a small price to pay for their fiscal delinquency, and in this car culture of Orange County, it just might prove an easy solution. I’m all for it.
It makes for nice populism but it’s not going to last. Just because some judge somewhere gave it his approval – another will come along and outlaw it.
It’d be no different if they changed the locks each month and only gave out keys to the non deadbeats.
They don’t have the authority to impede you from accessing “your” property. All they can do is levy fines. If the person stops paying then they should be using the courts to get them to pay up.
While I think it’s funny to watch the HOA harass these people – it’s obvious that they are overstepping their bounds.
Northpark tried something similar to this HOA story a year or two ago. They planned to make everyone not paying dues have to stop at the guard house to gain entry. From what I understand, people were very upset about it and showed up at the board meeting to vote it down. Funny that non-payors get a vote.
You don’t have to pay taxes to vote.
And what should someone who’s unemployed, or taken a big income hit supposed to do when faced with utilities, or mortgage, or car payments, or groceries to pay, when it’s one of these item’s as opposed to the condo fee in their budget?
The HOA should probably be looking at it’s own balance sheet if it is that desperate to collect.
What they can do is cut services. Have the illegals come out and mow the grass once a month instead of once a week. Don’t heat the pool, etc. Once they are back on their feet and everybody is paying again, they can lower everyone’s fees or bring back the illegals more often.
If the residents complain well just say it is because Harry Dick in unit 201 and Johnson Wanker in 306 have not been paying their dues so now we all suffer.
Cut spending. File lawsuits. Peer pressure.
Problem solved.
These are mostly, it not all, people who have taken an income hit because of the economy.
Embarassing them because they’ve chosent to pay utilites, mortgage, food and car payments is not a solution.
In my neighborhood, HOA fees are not just for simple amenities like pools and grass cutting. That is a gross over-simplification. HOA fees are banked for future road paving, new roofs, sidewalk lights, and other valuable items that directly impact the quality of my home life and property value. It’s the very reason why I chose to live in a community with high HOAs and 500+ pages of CC&Rs;. I place a very high value of the appearance of my neighborhood.
HOA fees are determined by predicting the maintenance and improvement needs of the neighborhood with the number of homes who pay in. Every homeowner that does not pay creates more financial pressure on the remainder of us. My neighbor abandoned his home because he bought at the height of the bubble and it’s been empty for 6 months as a bank owned. You think I can just embarrass the bank? I wish the bank had to pay those HOA fees because I know my fees will go up as a result.
No one is seriously suggesting that a homeowner be DENIED access to their home. But removing their transponder and pool key is a small penalty that should be enacted. I only wish our homeowner’s association had even more teeth to go after these freeloaders.
Anyone who cannot afford their $275/month (that’s what I pay for my 2100 sq.ft. in Northpark) in HOA fees really needs to think about moving — I bet they spend than that amount in meals and movie tickets every month.
Well that’s the problem with HOA fees when they turn into a big 275.00 a month Frankenstein.
My idea of “reasonable” association fees are 50.00 to 60.00 a month. Beyond that you are just asking for trouble. Your association turns into a big service providing monster that wants to grow and grow with never ending fee hikes.
You are right, I did not mention the paving of the parking lot – so what? That’s an expense that can be cut just like anything else.
So the people are freeloading – that’s what happens under these socialist programs where everyone tries to live at the expense of everyone else via socialist landscaping, road paving, pool heating, etc..
People hit by hard economic times are not freeloaders. That’s a pretty harsh and cruel judgement.
And they’re probably not in position to move, whether or not they are upside down on their motrage which many are not, they’re just not able to currently keep up with all obligations.
In the 9 years I’ve lived in Northpark, my monthly fees have increased from $220/mo to $275. Hardly an ever-increasing amount for one of the most beautiful neighborhoods in Irvine, IMHO.
If someone cannot pay their HOA, then I recommend they make arrangements with the company that manages the HOA finances. I’m sure a financial arrangement can be made.
Let the roads go unpaved — are you kidding AZDavidPhx? Just like most things in life, regular maintenance costs less in the long run than just forgetting about it until major repairs are needed. That’s fiscally foolish advice.
Why is everyone making apologies for those who cannot pay their HOA fees? Show me that they canceled such unnecessary expenses as cable TV, cell phones and dining out and maybe I’ll have sympathy (tho I still expect them to pay).
Until then, I’m certain these freeloaders — because that is what they are — are maintaining a modern lifestyle and choosing to not pay one of the few bills that is difficult to enforce the payment.
I don’t see ‘everyone’ making apologies, only me.
And the HOA fees get paid eventually, either caught up or upon sale, unless it’s a bankruptcy or foreclosure (someone feel free to correct me if that’s not the case).
And you don’t know that they haven’t cut personal expenses, just assuming that they are a ‘freeloader’.
Do you have a specific neighbor you’re mad at? It sure sounds like it.
I’m apologizing for nobody. I don’t believe the monthly HOA number was mentioned regarding the profiled individual. If she is running away from a 50.00 monthly obligation that’s one thing but if it’s a 275.00 monthly fee and she has no job then there is only so much blood that the HOA can squeeze from this unemployed turnip.
She could also be rolling past the fake security guard each day in a dubbed out Cadillac crying poor. I don’t know.
I would agree with you that the 100.00 cable bill should be sacrificed before the HOA fee but then she won’t be able to watch quality TV shows like American Idol, Property Virgins, or Man Vs. Food. Have you no heart?
I never said to not ever pave the parking lot ever again – just put it off a few months while cutting spending on other things. The HOA could save quite a bit of money by excusing the faux security staff that is paid to watch TV in the guardhouse all day long and let people in and out like children while the bad guy sneaks in unmolested.
I’m just saying the servicecreep results in continuous fee increase one nickel here and there and suddenly 9 years later your fees have increased 25% while wages have remained flat.
Time for HOAs to cut spending if they get so desperate as to block a resident’s guests at the faux security gate.
It’s no use even trying to engage in discussion with the guy from AZ, he is delusional, consumed with bitterness, and lashing out at everything he can pin the problems on. If you think by engaging him you will enlighten him, you would have a better chance at attempting to make feces smell pleasing to the senses. I can smell his posts as soon as they hit the blog.
Does AZDAvidPhx live in Arizona or a transplant to Irvine from AZ?
btw, to repave HOA roads or re-asphalt usually takes 3 – 6 mos of planning and getting bids out and back.
Its not something that can be done cheaply, generally speaking.
also the longer asphalt repair is delayed, the more pavement degradation takes place, particularly here in California after Jan-March rains. Potholes get bigger and deeper, road cracks widen and lengthen….
Do you really think that cooperative efforts such as road paving and pool heating are socialist? Would you prefer to ask/require each resident to pave and maintain say, 4 square yards of pavement and 3 bushes?, and clean the pool on the first Tuesdy of each month? Would that be practical, economical, reasonable, safe? Get a grip! I’ll gladly pay my HOA fees (currently $150) and expect my neighbors to do same. I don’t want to swim in a pool that was cleaned by committee; I want to swim in a pool that was cleaned by a professional cleaning service, and that costs money. What about insurance, which can be a substantial portion of HOA costs; should each of us homeowners be billed separately for insuring the common spaces? These rates don’t go down because of non-payment by some owners!
Re another post in this thread: there was mention of people choosing to pay their HOA fees last because non-payment of HOA fees does not affect their credit rating. Why is that? What if HOAs started reporting defaults?
they should print the list of names/unit # that haven’t paid HOA, and post it everywhere in the community
There are probably legal privacy issues that prevent this sort of action. Not to mention the notion that an HOA is theoretically neighbors corking together to improve quality of life, and they all have to live together after the crisis.
Back in the day when I “owned” the HOA regularly circulated the “newsletter” that included the unit numbers of people who were “late”
“Funny that non-payors get a vote.”
Representation without taxation? It does seem un-American.
If only those who payFed income taxes could vote nationally the political class in this country would be very different than it is today.
It sure would. Amerika could be ruled by a two tier system just like all the other corrupt form of government.
It amazes me how many people are so willing to take another persons freedoms away, but when someone even hints about taking THIERS, they cry and scream.
Reading posts that de-humanize people based upon their income is enough to make me against you AND whatever point you were/are attempting to make.
How about we take ALL the money, put it in 10 people’s hands, and only allow them to vote as they would be the only ones with money.
IR,
Are the Hardmoney Lenders willing to finance the buyer, or just purchase at auction with the expectation the buyers will then find traditional financing while in escrow?
The hard-money lender is only needed for the acquisition and the holding period while the buyer arranges traditional financing. One of our key functions is to pre-screen buyers to make sure they can really close the deal.
The beauty in this arrangement for hard-money lenders is the quick turn. If you flip for speculation, it is difficult to turn the property over in under 100 days; however, if the buyer is already in escrow, the turn is generally less than 50 days, and the money can be turned over many more times which dramatically increases annual returns, even if the profit per transaction is less.
I loved the sob story…they won’t even let the pizza delivery man in anymore. Given her financial situation, she shouldn’t be ordering pizza.
I think this is a good move by the HOA. When times are tough, the HOA dues will be the last thing that is paid. They are making life a little more uncomfortable for these people, which might force them to pay up.
Oh man, beef is going to deny pizza to delinquent HOA members.
Obviously this individual has gone above and beyond to get herself on the HOA’s radar leading them to dig their first parallel.
How many nastygrams does one have to ignore before it comes down to a blockade of one’s dwelling and siege style tactics? They should surround the gate with cannons and some of those English guards marching to and fro. Let these folks know that they mean business and that nobody shall screw with the HOA.
AZDavid, you can rest assured that the monthly car payments for the 2 SUVS are payed, the cable bill for the 200+ channels is paid, high speed internet…check, fancy cell phones…check, season passes to Disneyland…check.
HOA is a low priority because of the “what are they going to do to me” mentality. All the other bills can have services turned off or possessions repoed.
I actually do feel sorry for people who have hit hard times. But I’m sure many of those people made very foolish decisions over the past few years and are now paying the price. You always say you don’t want to bail deadbeats out, I’m sure these people’s neighbors who live in their community feel the same way.
I could not agree more! As I said, my neighbor abandoned his house and we’re stuck paying his unpaid HOA fees for 6 months. But he bought a new Lexus ES300 before he moved out one night. Funny that. Makes me sick actually. Meanwhile my car is a ’93 and I always pay my HOA fees.
I’m definitely not endorsing being a deadbeat on your HOA dues. People choose to live in areas and know the costs ahead of time.
What I see here though is the HOA sidestepping the legal system because it is not worth the hassle to them to pursue the monies that way. Instead they are denying reasonable access to the property. It’s funny and all, but clearly it begs the question : why not get a judgement against this person and garnish her wages? It’s very easy to file a small claims case against someone. Sue them for late fees, court costs, etc.
The option is there but they are too lazy to do it themselves and they don’t want to retain a lawyer for 250.00 an hour to file some paperwork.
That’s my complaint – I could not care less about the personal circumstances of the delinquent.
IR,
Do you know if there is an income limit to qualify for an FHA loan?
Is FHA loan more expensive (after PMI) than conventional 30-yr fixed loan?
Is FHA only for 1st time home buyers?
thanks.
FHA is for us all! If you are looking to go into debt well then our Government has just the program to HELP you out. Right this way, my friend.
http://www.crackthecode.us/images/YouNeedCredit.jpg
The consumer credit comes later when owners pile a HELOC on top of their FHA loan….
You can’t just assume that an FHA buyer will be able to live without a Gourmet Kitchen or a hot tub in the bathroom. We must keep credit flowing to allow house debtors to make these essential upgrades and investments in their futures. Buy now with an FHA “loan” or be priced out forever.
This should definitely be an option for one of those credit cards where you can put your own picture on it.
No AZDavid, you got me all wrong!
What I was having in mind is come up with a sound plan something along the line: down 3.5%, make a couple of payments then stop to live rent free. let say i’m looking at a $750,000 house. this plan will all depends on how long it would take them to repossess the house, but roughly at least a year of free rent to recoup my downpayment. 3.5%*$750,000. rent of a house say approx. $2000/month
Guys, any good ideas on how to achieve this?
If the govt. wants moral hazard, they got moral hazard.
I’m fed up with paying tons of taxes in order to bail out these F*cking dead beat home debtors!!!
John,
You would need to speak with a lender about these issues for a definitive answer.
I am not aware of an income limitation, but their is a limit as to how large of an FHA loan they will underwrite: $729,750.
FHA loan will generally be comparable though somewhat less expensive than PMI.
FHA is not limited to 1st time buyers, but you can only obtain FHA loans so often, and you can only have one at a time.
FHA does not have an income limit. You do not need to be a FTHB.
FHA insured loans are very expensive relative to Conventional financing with PMI. Since this home is an attached property in California, you’ll have to put 15% down to purchase the home. If that’s not possible you then are left with FHA or VA only. There are a few unique FTHB programs still left out there that will go to 95% LTV, but the restrictions are so great that the deal does not pencil out.
My .02c
Soylent Green Is People.
Dang! Your post is a week late for me. The house I wanted went to a flipper at auction last week – at less than my short sale offer to the bank last year. But I don’t know if 97% of comp wouldn’t have done me any good anyhow.
Discrepancy? Redfin says this Windrow home is in the Orangetree area of Irvine (it’s not Northwood). Also, it says house is 1,450 sq.ft but shows as 2,266 sq.ft here. I did not read all the details but am I missing something?
I didn’t copy over the details properly. I have updated the post. Thank you for calling my attention to it.
Some Trustee Sale flippers aren’t wasting time.
32 Rising Sun just listed at $825K
Purchased by 3rd party at auction for $730K on 3/16/10
It will be interesting to see how fast and at what price it goes for.
Flippers like the move-in ready properties because they don’t lose time with renovations. Of course, they also tend to overpay for this luxury. It will be interesting to see if they hit their margins.
That is not what the front of 4 Windrow looks like! The realtor who took this picture took a picture of a prettier house with the same floorplan. The outside of 4 Windrow is actually just plain off-white stucco, not very pretty. Is that deceptive or what? What realtor would do that? Oh, I know who….
Lies all lies.
Please refer to the Used House Peddler Code of Conduct Article 2.
Such a treacherous act could only be the work of a damned rascal, subject to being stripped of his honors and privileges to peddle houses upon this land in god we trust in violation of realtor (little ‘r’) Code of Ethics Article 2 Statutes regarding exagerations and misrepresentations of pertinent facts regarding the property.
Let the speaker present his evidence.
IR, I was disappointed in your post today, and I am not sure I have much faith in your blog anymore. Now, it really feels as if the purpose of the blog is for you to make $$ rather than provide an real assessment of the market. The house is ugly and I’m sure horrible on the inside; yet, you seem to be encouraging a purchase price of nearly half a million dollars. Maybe I am wrong and misunderstand. If that is the case, then please enlighten me. An article on the yahoo front page today lists Orange County as one of the least stable housing environments in the country and the article noted people should not buy there due to overinflated prices.
But PlanetReality said the market hit bottom and low interest rates are here to stay!!!
This site has been monetized for a long time. What’s the big deal? You still get to write whatever you want in the comments.
I think the IHB approach is great. They identified a market demand, and structured the company to take advantage of it.
Most people don’t know how to buy at foreclosure auctions. IHB is going to do it for these people and offer a 3% discount on comparable sales. The people will get the house in a “move in” condition at 3% discount.
“Move In” condition is subject to interpretation..hehe
Only 3% discount? Is it 3% discount based on the current non-shorty debtowners’ WTF asking price or the market rate based on the 3 online appraisal agencies?
We pull comps ourselves. We need to be sure of comp values in case the deal falls apart and we need to find a different buyer. We discount 3% from our comps which the hard money lender agrees with.
IR:
Do you have this service for Coto?
“Now, it really feels as if the purpose of the blog is for you to make $$ rather than provide an real assessment of the market. The house is ugly and I’m sure horrible on the inside; yet, you seem to be encouraging a purchase price of nearly half a million dollars. Maybe I am wrong and misunderstand. If that is the case, then please enlighten me.”
I present people with an opportunity they otherwise would not have, and I honestly advise them on the wisdom of taking or not taking the opportunity. In fact, in tomorrow’s post, I openly tell people not to do it because the property is a POS. Most properties going REO right now are not desirable properties.
I encourage nothing. If someone is willing to pay what is required to obtain a property knowing it may fall in value (probably will), am I supposed to deny them this opportunity they freely choose knowing the circumstances? I am not responsible for people’s decisions, but I will try to give them the best and most accurate information they can have.
We have already put many clients into homes, and each of them knew what they were getting into, and each of them felt they made the right choice for their families. None of them believe prices are going to rise any time soon. Each of them wanted a home for their families. We helped them get that.
I wish the market were at the bottom so I could stop telling people on the margins to wait. One customer who was eager to buy said he may need to move in three years, so we talked him into renting. If the market were at the bottom, I would not have to give that advice, and IHB would make more sales. I don’t do that because, as you noted, OC is one of the least stable housing environments in the country, and people should not buy here looking for appreciation, and they should have full knowledge of the downside risk. With what I write every day, how could I tell customers otherwise?
“After I finished laughing, I would either move, or pay the fee and deduct it from my rent. If the deadbeat landlord had the nerve to complain, I would point out their breach of contract and move — I might even sue for damages.”
IR, I’d like to point out that the landlord has the renter’s security deposit (i.e. huevos) and thus there might be issues when the renter decides to **deduct** the HOA payment from the rent.
Move? Again, security deposit in exchange for breaking a lease.
Sue for damages? Ummmm…based on the current state of the states, I wouldn’t be surprised if you continuously hear the word ‘backlog’.
All that pain…..ain’t worth it.
As I understand a FHA can get approved through a regular bank faster than a regular loan. The FHA needs 3.5% down plus 1.5% fee for non-subprime borrowers. 10% down for subprime, For 2.5 years free rent, the ROI is 350% based on rents = interest, taxes, insurance, etc. interest 5%, 1% taxes so likely 7% to rent. 2.5*7=17.5% free rent vs. 5% for FHA loan, Do I smell moral hazard, but that’s okay because the banksters will have already collected the 1%, govt to pay for the loan servicing fees and bank’s FC fees, and the federal taxpayers will be left paying the all the bank fees, missed payment less property taxes. Local taxpayers will need to make up for the property taxes. The unpaid HOA fees will need be be made up by the paying HOA members. Buy now while it still a great investment. By then the home owner will have save enough for at least a year of prepaid lease, so their credit rating can be repaired.
My MO HOA explained that it had to raise the fees for $35 to $200 for one year to service the dam. Then lowered the HOA to $70. BTW that’s HOA is the yearly fee, not monthly.