hoa defaults

the preceding article reviews the problem with hoa defaults in ca. -- sounds a lot like la -- but la has a lot more defaults than it should have -- i believe that the last stated number was 100+ members not paying -- that is unacceptable and this bod needs to consider a better approach to this problem then just carrying these properties for years and having everyone else pay their way-- a collection agency can go after delinquent payments and follow up with filing liens and reporting these delinquent members to the various credit rating agencies -- these people aren't concerned about the financial welfare of the community assoc and therefore the assoc should not be concerned about the consequences of the credit rating being dinged up -- even if la gets nothing financially out of this action it is worth it to send a message that la will pursue all methods to collect defaulting fees and that will lead some to either pay up or perhaps sell their properties -- any way that these non paying members are removed is beneficial to the community--a difficult financial environment may be just around the corner and the bod should prepare to take strong action to go after defaulting members and the fees or else they will be looking for a special surcharge to cover the operating expenses to operate la --that will be bad for the bod

hoa defaults

Foreclosures put county's HOAs in financial bind
Mortgage meltdowns have cut into homeowner association budgets, prompting fee hikes and delays in repairs.
By JEFF COLLINS
THE ORANGE COUNTY REGISTER
Comments 64 | Recommend 11
Correction: The Robinson Ranch Community Association in Trabuco Canyon is not considering asking homeowners to volunteer to provide basic maintenance such as mowing lawns. Nor has it taken steps to negotiate lower water rates with the Trabuco Canyon Water District. Due to incorrect information provided to the Register, an earlier version of this article reported incorrectly that it had done so.
LAGUNA HILLS Hard times have hit Aliso Meadows hard.
The Laguna Hills condo complex had at least 23 foreclosures in the past six months, resulting in months of unpaid homeowner association dues.
Now, Aliso Meadows is so short on cash that it has deferred roof and termite repairs, can't fix rotten wood siding and must wait to fix potholes "big enough for your families to make Jacuzzi's of," association officials said.
"In some cases, we're doing (repairs) piecemeal. A fence here, a piece there," said Art Recalde, president of the Aliso Meadows Condominium Association. "We can't afford more."
Aliso Meadows is one of many HOAs in Orange County and around the state that are having trouble coming up with the money they need for maintenance and services because of rising foreclosures.
While most HOAs in Orange County are able to ride through turbulent times, many – mainly newer ones and ones catering to first-time home buyers – are reeling from mushrooming delinquencies.
Examples of HOA troubles include:
A Lake Forest condo complex plagued by at least five dozen foreclosures and mortgage defaults had to defer all but the most urgent repairs, leaving termite and wood repairs undone.
A Placentia complex with at least 33 homes in foreclosure or default ended up raising monthly fees and levying a $1,000 special assessment. The increases were caused in part because of prior financial problems, but foreclosures were "the icing on the cake," the association president said.
The HOA for a Huntington Beach senior complex has limited its tree trimming services to trees that are in most need because of safety concerns.
Experts say that problems like these are most pronounced in the Inland Empire and Central California where there were more new buyers stretching their finances to afford a home.
In the more extreme examples, lawn mowing, street sweeping and window washing are cut from three times to one time a week. Pools go unheated in the winter. Security has been curtailed.
Industry officials say that the majority of Orange County homeowners associations have the resources to overcome increased delinquencies.
But even financially sound HOAs must budget for bad debts or, at the very least, pick up expenses for one or more neighbors who have abandoned homes in the face of foreclosure.
"It isn't all about destitute homeowners associations," said Robin Owens, managing agent for Affinity Property Services Inc., an HOA management company that oversees about 1,200 units in Orange County.
But, she added, "Am I going to budget for bad debt? Absolutely. Everybody's going to budget for bad debt. I don't know what's coming down the line."
Mini-governments
HOAs are like mini-governments set up to maintain commonly owned property in a housing development. They maintain private roads and care for community pools, clubhouses, landscaping, roofs and elevators.
To pay for those services, they levy monthly dues on each property owner in the development and can require owners to pay special one-time assessments for emergency repairs, like cracked foundations or leaky roofs.
Even a few foreclosures can eat giant holes in an HOAs finances.
Associations must maintain "zero-balance budgets," meaning they can raise just enough money to cover expenses and build up reserves for future maintenance, industry officials say.
Homeowners facing foreclosure often stop paying dues for a year or more before losing their home, so the unpaid dues mount up.
"When some homeowners aren't paying their fair share, it puts a burden on the other homeowners," said Karen Conlon, president of the California Association of Community Managers.
Orange County has 4,400 HOAs, the third-highest number in the state, after Los Angeles and San Diego counties, according to Conlon's trade group.
More than 61 percent of Orange County's residents live in an HOA, with more than 750,000 homes belonging to those associations.
No one tracks how many associations are facing financial problems. But Aliso Viejo-based Merit Property Management reported almost a ten-fold increase in the percentage of delinquencies in the 140,000 units it manages statewide.
Merit reported that 2.4 percent of annual dues were 90 days or more delinquent as of June. That's up from 0.25 percent in June 2003.
Those numbers are skewed upward somewhat since Merit added newer HOAs in recent years that are more prone to delinquencies, said Andrew Schlegel, Merit's vice president of finance. Without the addition of the new HOAs, he guessed the delinquency rate would be around 1.5 percent – still a six-fold increase.
In addition, Schlegel projects that Merit will file liens on 4.8 percent of the units it manages this year for not paying HOA dues, up from 1.2 percent in 2005.
Dues first thing to get cut
Schlegel said delinquencies began rising as recent homebuyers using creative home loans began to get in a financial bind.
As home values dropped and mortgage payments adjusted upwards, many of those new residents "are throwing up their arms and walking away," he said.
The HOA dues are often the first thing such residents stop paying.
When lenders foreclose, the HOA liens get wiped out, and going after the residents in court often amounts to throwing good money after bad, he said. The residents can't be found, and when they are, they're often broke.
In Orange County, however, most HOAs are older and have built up reserves to cover the problem. They have fewer new residents who bought at the top of the market.
And the newer communities here, such as Talega and Newport Coast not only see fewer foreclosures, but also were put on a sound financial footing by the developers who built them, Schlegel said.
Less common, but still pervasive, are associations like Aliso Meadows, where HOA delinquencies swelled to around $150,000 – up from around $35,000 two years ago – as foreclosures mounted, association officials say. The HOA raised fees by $10 to $240 a month to make up for that loss.
Elsewhere, "For Sale" and "Bank Owned" signs dot units throughout the Aliso Creek Villas in Lake Forest, which had 63 units go into foreclosure or default, according to ForeclosureRadar.
Association President Ginny Dunn said those foreclosures created a financial burden for the Aliso Creek HOA, which had to defer wood and termite damage repairs and concentrate on the most urgent items.
"We take care of anything that's a dangerous situation," Dunn said. "But those things that aren't, we put to the side and will get to them when funds are available."
At the Cinnamon Tree condos in Placentia, more than 30 foreclosures and mortgage defaults have aggravated the complex's existing financial troubles and disputes.
Foreclosures, and HOA delinquencies, mushroomed after prices there fell from around $300,000 a unit to as low as $150,000, helping to push the board into raising fees and levying a $1,000 special assessment, property owners there said.
Even in developments where foreclosures are rare, HOAs still have been forced to step in and care for vacant units – at the association's expense.
At Threewoods, a Fullerton community of $1 million homes, owners abandoned one unit under the threat of foreclosure, leaving the association to water and mow its lawn during the months it sat vacant. The association also was forced to act after a 100-pound beehive was discovered inside the home.
Conlon, president of the state trade group, noted that her own association in Laguna Hills discovered 14 squatters had taken up residence in one of four foreclosed units.
While four foreclosures may not seem like a lot out of the 133 units in the complex, Conlon noted that those unpaid fees add up.
"We're not talking about one month or two months. We're talking about a year to 18 months," she said.
"It's going to take us a long time to recover," Conlon added. "I think it's going to take a good two to five years to fully financially recover from all the things happening in the community."
Register staff writer Mathew Padilla contributed to this report.
Contact the writer: 714-796-7734 or jcollins@ocregister.com

rain rain rain

yes all day -- rain and constant misty weather -- mild temps but sure couldn't clean up leaves-- cleaned up some of my destroyed screen house -- finish the rest tomorrow -- then it is going to get cold at night -- low 20's-- need to drain water and put antifreeze in the lines -- winter coming

drove around today and was rather surprised at how many trees are down -- the street behind me village drive west has about 3 or 4 with trees on the trailers -- i think more have come down since the storm because of the high winds that have been buffeting the area-- some members will have quite a bit of fire wood and a few roofs to repair

the october storm caused a lot of damage --

screen houses + bj's

Anonymous has left a new comment on your post "screen houses":

Thank you for the information. I checked it out and it's much cheaper then the prices on the Kay website


anon -- yes i just ordered one price was 1211.89 and free shipping -- can't beat that with a stick




#65

comment replys

Anonymous has left a new comment on your post "comment reply":


You're right, I've been here 20 years and invested alot of money in my place. But it seems that there's no pleasing the couple of people who have made dissing LA and spreading all kinds of BS about what is not being done with utilities etc. their main goal in life. Hate to burst your bubble but there is plenty of ongoing work and also much that has been completed. Yes, the BOD right now seem to be chasing their tails, and it probably is no coincidence that the dues were lowered $150 (which we really can't afford to do) because of the upcoming election since it is only for this year!!! That reduction has got to affect the 8 year plan and BOD was foolish to make that move.



Anonymous has left a new comment on your post "comment reply":


Do we really need an obituaries page on www.lakeadventure.net? This is stupid and should be removed. I mean no disrespect to any of the names listed, but they are dead. Move on already!

I can think of so many other topics that would be useful. I'm sure that anyone thinking of purchasing at LA would be pleased with an obituaries section. NOT!

comment reply

Anonymous has left a new comment on your post "comment":


I didn't buy a lot and trailer to go "real camping" I bought them for summer weekends and vacation otherwise I would have bought a tent and sleeping bag. We pay almost 40% more in annual dues than other local rv communities yet I don't think our amenities are 40% better. We could lower our dues a little if we weren't paying retainers to lawyers for five years to get 12' wides approved. It's been over one year since anyone representing LA has met with the township on this issue. If I'm mistaken about the time table please let us know. You have a good idea about collecting wood, maybe we should consider having a neighborhood clean up day in autumn and storing old tree branches in the maintenance area for just such a snow emergency. I have bundles of logs in back of my house that I paid for, at LA we could get all the wood we needed for free.

anon -- you sure are right on about this place == people have major investments at la in trailers, decks, screen houses and etc. and that should be of concern to them-- obviously the camper lives in a pup tent or a pop up and he's happy as a clam but the rest of us who have an monetary interest in la have a right to demand more and expect that la is run professionally and has a capable management in charge-- also we expect and should have a bod that enhances our investment and protects our interests even if they're not looking after their own -- if this bod can't do this then they should be replaced -- it has been a year of one failure after another, manager fired and no replacement, 12' issue allowed to die, quality of life continues to decline, no oversight or progress with the lateral project or electrical upgrades, closing of laundry with no alternative facility or plan to upgrade or replace the service, no emergency preparedness or procedures to handle emergencies, an across the board reduction in fees during an extremely dangerous financial crisis in the country with no consideration what they'll do if member's fees defaults escalate and hinder their ability to pay the expenses, no evidence of a plan or attempt to reduce discretionary spending and modify operations in the event of heavy defaults-- this is a perilous time for la community and it's very doubtful this bod has control-- the members may indeed pay a very high cost for this incompetence of this bod