As many more people fall behind on their mortgage payments, so it seems does the ability to pay HOA dues.  Many assume that the short sale or foreclosure will resolve any missed HOA payments, penalties and even attorney fees.   The fact is, the debt will survive foreclosure and will most certainly reak havoc for the short sale process.

HOA’s have more Power than we think.   They have the ability to follow the individual after a foreclosure.  While a short sale requires resolution to clear title, the past HOA dues and penalties can nix a deal.  

In Arizona there are so many foreclosures and short sales, where homeowners have not paid the dues.   These bills have mounted up, and in some communities have caused serious financial hardship to the HOA management – which in effect – impacts those still living in the community and paying their dues.   The current homeowners are feeling the affects of the HOA debts.

Take for example the community that has over 75% of the homes in either foreclosure or short sale status.  Imagine all or even half, of these homes are behind on their dues.  The money that is collected was to be used to maintain the streets, community common areas, landscaping, and even lighting.   Now this particular community’s HOA is so far behind, the HOA has stopped landscape, street and common area maintenance.  If that isn’t bad enough for the remaining homeowners, the street lights were turned off due to the inablity of the HOA to pay the bill.  

While we understand the hardship many homeowners are going through in paying their mortgage and other bills, there are some steps that can be taken to avoid the HOA issues.   First, if you are planning to short sell your home, continue to pay the HOA.   If not, this will only come back to bite you in the end.   Banks are not paying past HOA dues or penalties.  If you have not paid your dues, you are not only incurring monthly penalties, but could also be levied additional attorney fees when the HOA decides to exercise their option to persue you.  The bank will not pay for these, and buyers are smart enough to recongnize they aren’t responsible and will refuse to pay them as well.  That leaves the Homeowner. 

If it is impossible for you to continue paying HOA dues during your short sale…..be prepared for the end.  Remember that HOA’s are liens to the property and must be cleared in order to complete the short sale.   In some cases, the HOA will negotiate with you for a reduced number.  For example a recent homeowner had an HOA debt of  $3,500 and the HOA accepted $1,200.  There is no guarantee that the HOA will negotiate, so be prepared either way.

HOA’s and their lien on a property can be the kiss of death to a deal.    Make sure you are communicating with your HOA – it will go a long way to resolving the debt when the time comes.

If you are considering short selling your home, don’t hesitate to call or email us for more information

By now many of you have experienced the pains of a short sale with Bank of America. As much as they have tried over the last year, they continue to fall short on their promises to improve their process and procedures.As realtors, we have a huge influence on where we send our clients for new financing. Bank of America’s performance on short sales have left such a sour taste in our mouths, that we cringe at the mere mention of a new loan with Bank of America.We recently attended a round table event with a Bank of America negotiator. He was very honest with us and was not in the least surprised at the negative comments slung at him from fellow realtors. While he truely understands the frustrations we are feeling, he was also quick to agree that we as realtors, are the future referrals for Bank of America.This gentleman went on to explain his purpose….to obtain information to send back to the higher up’s so that the short sale process could be improved. Lots of notes were taken, and as a courtesy he has even reached out to help those realtors in need.The new Equator (old REOTRANS which was adopted from the bank owned tracking system) is to be the new method for tracking and escalating short sales. Unfortunely from our experience this has not helped the cause. In fact, some of our short sales were within days of investor approval and were moved to Equator only to sit for another 30+ days. While the news continues to report that the next wave of foreclosures are still coming, Short selling a home is still the best option for most homeowners. As we move into 2010, I’m hopefully that Short Sales will no longer have such a bad reputation in the industry and banks such as B of A get their act together.