Comment

Comment by Thom Colby CA Brkr 888-391-5245 on February 23, 2012 at 7:00pm

@ Patsy - I agree with you - Sounds like there is now a Cloud on Title she is not the owner of record - but really she is once they get this cloud figured out.  She needs to get a copy of Prelim Title Report and send it to BofA Loss Mitigation explaining she can't sign a Listing Agreement !

Comment by Thom Colby CA Brkr 888-391-5245 on February 23, 2012 at 6:56pm

When any subordinate forecloses it is "subject to" superior liens.  So for example if a 2nd foreclosed (this is why they never do) it would be "subject to" the 1st lienholder.  The 2nd would have to pay the first to keep them from foreclosing - Same with HOA.

Comment by Patsy Clevenger on February 23, 2012 at 6:56pm

I know that an HOA can foreclose subject to the 1st TD.  The amount was over 14K when then did last year. When an HOA does foreclose the homeowner has 3 months to redeem the property.  This property is still occupied and the 1st was supposed to foreclose by this person got them to postpone because she is trying to do a loan modification.  I don't think that B of A has looked at title to see that she is no longer the owner of record.  She now has been approached by an agent to do a HAFA short sale..This agent is saying she has been contacted by the HOA to see if she would be cooperate with a short sale.  I don't see how this can be done since she is not the owner of record.  The way I look at it a listing contract can't be signed by her because she doesn't own the property...B of A will reject a listing and or purchase agreement with the HOA's name on it since they are not on the loan.  I've tried to talk to this lady when she calls letting her know that the only way that I see B of A doing a short sale is to have the HOA reverse the foreclosure which I don't see happening.  Any one else have any experience with this or comments?

Comment by Catherine Gheen on February 23, 2012 at 6:53pm

So they do have to pay off the first lien say with B of A or?  and then they gain first position.

I did not think they could take over the property, rent it out and then pay the first mortgage if they are not the borrower on the loan?  I thought to do it the way you describe would envoke the due and payable clause in the "Note" in the borrowers loan?

Comment by Thom Colby CA Brkr 888-391-5245 on February 23, 2012 at 6:44pm

Yes, an HOA can foreclose but it is subject to the 1st TD (and other subordinate TDs if any). Here in SoCal, it is becoming more common for HOAs to foreclose especially on vacant properties and then they rent them out to pay the 1st and the HOA.  It's really a way for the HOA to get a better position to recover their losses.

 

Typically it is not a small amount that's due to the HOA.   It could be in the Tens of Thousands of Dollars.  For example, if the HOA dues is $1,000 a month and the homeowner hasn't paid in 3 years, that's a big chunk of $$ especially with penalties and legal fees added.  I've seen short sales where the amount due is in excess of $25,000 and the HOA absolutely will not negotiate it down so they place a lien initially and subsequently foreclose.

Comment by Jan Sanderlin on February 23, 2012 at 5:43pm

That is just whacked...It doesn't make sense that theHOA would foreclose for just a small amount. and have to perfect the first lien.  More than likely, the HOA filed a secondary lien, so that they have are in line when the home is short sold. This is a much more likely scenario.

Comment by Catherine Gheen on February 23, 2012 at 4:13pm

I have heard of HOA's doing this due to homeowners not paying their monthly dues.  Did the HOA payoff the first lien with B of A?

If that is a sizable chunk of money I wonder how they justify to their board members?

I wonder too if the homeowner could file a wrongful foreclosure action against the HOA stating the the HOA fees were unaffordable and that the HOA did not work with the distressed homeowner?

Just wondering.........

Comment by Patsy Clevenger on February 23, 2012 at 3:04pm

OK maybe I'm crazy.  Got a call from a homeowner who has a loan with B of A.  The HOA foreclosed on her over a year ago.  She was approached by someone to do a short sale saying that the HOA had asked them to contact her.  Homeowner is no longer on title but still has the 1st TD.  I know that an HOA can foreclose subject to the 1st TD.  Has anyone dealt with this before?

Comment by Thom Colby CA Brkr 888-391-5245 on February 23, 2012 at 12:32pm

@Henry -

 

You made two important statements;

1) I've have been negotiating as a 3rd Party for brokers

2) I am not a broker or an attorney I am unable to provide a license number

As a 3rd Party negotiator, the bank wants to have someplace to put the responsibility when a transaction goes wrong - they want to know you are covered by E&O and that you are appropriately licensed to negotiate a Real Estate transaction or Loan Settlement.  Since you are not an attorney and not a RE licensee you are not covered by any E&O policy - so if you mess-up, who takes the hit?

Comment by Anna "Banana" Kruchten on February 23, 2012 at 12:03pm

Henry here in AZ you must be a licensed agent or an attorney to negotiate short sales.  RE dept made that clear several years ago.

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