I had a client who recently contacted me regarding a foreclosure notice from her Home Owners Association. I initially told her to disregard due to the fact that if an HOA wants to foreclose they are in a subordinate position and would have to buy out the 1st and 2nd. Well guess what, not true because I received another call the same week from a friend who told me the association actually did foreclose. I said that’s impossible and pulled title and I was stunned when I saw the HOA was now on title as the owner. No way this could happen, I thought what happened to the 1st and 2nd? Were they bought out? Actually we called the 1st lienholder and they had no idea the home foreclosed. Insane! I called 8 trusted Real Estate friends who all told me that was impossible but it was true. The crazy thing was the 1st is in negotiations on a short sale and per them they were moving forward. I did’nt know what to say to my friend. This is so new to me but I guess its happening in Texas quite often now. I would love to hear other stories about how the home is ultimately disposed of. From what I understand the homeowner has a 90 day redemption period but the problem is the homeowner can be 3 months late and owe 10,000 in fees. That’s the scam. Somehow they jack the fees so its next to impossible to pay to get the house back then the Management Company for the HOA holds the deal hostage and I heard can ask for as much as 25% of the balance owed on the first. Talk to me out there, this is insane.
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