justice – Page 47 – HOA Constitutional Government

Mortgage industry – developer cooperation for HOA survival

Does the mortgage industry collusion extend beyond just foreclosure to a broader tit-for-tat, “one hand washes the other” cooperation with HOA developers? Ever wonder why your CC&Rs contain a 20 -30 year “no terminate” clause? Or why your CC&Rs contain archaic and ignored wording that the first lender must approve any CC&R changes? Or why there’s that PUD rider attached to your mortgage?

In order to understand the “why” we must go back in time to the period of the original promoters of the legal scheme for planned developments with homes associations. That was in 1964 with the publication of the HOA mass merchandising document, the Homes Association Handbook, Technical Bulletin #50, by the Urban Land Institute. (For an analysis of this document see Part I of The Foundations of Homeowners Associations and the New America). The document was one that spoke of a utopian scheme for better communities, which would also make tons of money for the developers and promoters. In 1964, HOAs were a new concept that had to be sold to all the “players” in order for the concept to succeed and, as with any new venture or concept, it came with high risks. One question for these mass marketeers was how to get funding from banks and mortgage companies to finance the development of planned communities, and subsequent HOA home mortgages. It was a question of insuring the survival of the HOA and, consequently, its marketing success.

First, the right to foreclose. One way was to come down hard on homeowners who didn’t pay their “fair share” and threatened the survivability of the HOA: create covenants that run with the land granting the HOA automatic liens for assessments and the right to foreclosure for non-payment. And, since there may be instances where there would be insufficient funds, as they recognized the second position status of the HOA, it was necessary to include a grant of right to seek a personal judgment against all of the assets of the non-paying homeowner. All in the name of survivability of the HOA for the future success of the promoters. (See Section 12.3 and 12.31 of the Handbook).

They were not concerned with constitutional and legal issues relating to democratic governance and protecting the rights, freedoms, privileges or immunities of the member-owners. They could not tolerate democratic protections by means of independent tribunals and so gave themselves, as Declarant, dictatorial rights over the community. The developers had to stay in control to protect their investments and profits.

Second, “sweeteners” for the lenders. With these strong measures to protect the HOA income stream from non-payers, who, by the way, may dislike the way the HOA was operated and want to withhold payments, they could now approach the mortgage companies and banks. They gave the lenders additional protections to get them on board – the HOA cannot be terminated until after the first 20 -30 years of operation, even though the developer no longer had any obligations to the lenders – he was long gone and had paid off the lenders.

So, why this “no terminate” clause? Why the PUD rider on individual home mortgages not owned by the HOA, that holds no title to the individual home? Why should the lenders want additional assurances when they got none of these with traditional, non-HOA homes? Why were they given these “sweeteners?” As an inducement so they would make loans in support of this unproven concept?

It appears that this was all for their mutual benefit, at the expense of the unsuspecting home buyers.

Stop your HOA foreclosure –demand the HOA to prove title

The real issue as I’ve pointed out is: Does the foreclosing party hold the deed? That’s what all the “robosigning” and “document irregularities” are all about — saying that they held the title. The MSNBC Dylan Ratigan show at 1:00 PM MST described the problem quite well. You can track it down by going to the internet and viewing the segment online. (View http://www.msnbc.msn.com/id/31510813/).

Ratigan asked if the foreclosure fraud was intended to cover-up the larger mortgage “give away” fraud. Ohio AG said foreclosures “involved filing fraudulent evidence” in the foreclosure process – “fraudulent affidavits.” Ratigan said it quite clearly: “the banks to bypass the normal court procedures to force the mortgage holder to prove they own the property in order to foreclose.”

HOAs DO NOT HAVE TITLE TO FORECLOSE!

While the CC&Rs and state laws allow them to foreclose, most must follow the laws regarding mortgage foreclosures. Homeowners facing foreclosure should get an attorney to stop any pending HOA foreclosure, ASAP!

And, have you asked yourself, why didn’t the HOA attorneys know about holding title? Why didn’t the national HOA education and lobbying group’s College of Community Association Lawyers (CAI’s CCAL) know about holding title? Why not?

See HOA foreclosures illegal under “no title” rulings?

HOA foreclosures illegal under “no title” rulings?

I now address the overall legitimacy of this right by the HOA to foreclose. I have said enough about the HOA draconian foreclosure right, its discriminatory nature, and its cruel and unusual punishment aspect when the homeowner losses more than 10 times the amount owed the HOA. Or the fact that it reflects the mismanagement by the board who refuse to use standard AICPA “provisions for bad debts” to ameliorate any shortfalls.

Most CC&Rs and state laws grant the HOA a lien on the homeowner’s property from the day the assessment is due, and that the perfection of that lien is automatic when the CC&Rs are filed with the county clerk. They go on to say that the foreclosure of the lien is the same as a mortgage foreclosure. And, to get around the protections against deficiency sales, the right to a personal judgment is given the HOA by the unsuspecting homeowner. However, if the underlying right to foreclose is invalid, then the personal judgment is notwithstanding. Also, the claim that the lien is supposedly a valid consensual lien is irrelevant to the argument advanced below.

Recent developments (see in general, “MERS: Is Your Home Foreclosure Proof?”) have surfaced the longstanding rule of law that to foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. Although the court rulings pertain to the electronic deed filing service, MERS, the reasoning can easily be applied to HOAs since they do not hold title, nor can they establish a chain of title for relief. The law requires that the party foreclosing must produce a promissory note or assignment that it is entitled to relief. The recent court cases held that, in regard to MERS, if the foreclosing party is not the title holder of properties held in its name, the chain of title has been broken, and no one may have standing to sue.

We all know that the HOA is not the title holder, nor has an assignment of interests in the property. Remember that the laws and CC&Rs explicitly specify that the HOA foreclosure procedure follows a mortgage foreclosure procedure, which renders its right to foreclose invalid under the recent court holdings (California, Florida, Kansas, Nebraska all serve as persuasive precedent). If the laws so favored the protection of a person’s home as to require a proof of a chain of title, there should be no exception for the HOA to have a bona fide right to foreclose.

There cannot be unconstitutional special laws for a private organization without passing judicial scrutiny as to an appropriate level of government interest or purpose. If there is such a compelling necessity, and not just a convenience, then why not protect the homeowner by declaring the HOA a government entity subject to the same constitutional restrictions and prohibitions as all other government entities are subject?

These recent developments also raise the issue of an entitlement to relief. What is the entitlement to relief owe to the HOA that warrants cruel and excessive punishment through foreclosure? What are the damages to the HOA that are never stated by the HOA to warrant such a draconian procedure? Damages that favor and benefit the third-party HOA attorney more than the HOA itself? If the lender must produce a chain of title when it has advanced hard cash, why is the HOA, who has not advanced any hard cash, entitled to the same relief?

Homeowners facing HOA foreclosures should immediately contact a lawyer to pursue this defense and put a stop to draconian foreclosures that serve to intimidate and punish homeowners who have fallen on hard times.

Psychologist defines the HOA Syndrome caused by oppressive HOAs

Psychologist, Dr. Gary Solomon, a professor at the College of Southern Nevada, has advanced a definition of the HOA Syndrome, a disorder not too different from Post Traumatic Stress Disorder (PTSD). He describes the syndrome as,

HOA Syndrome falls into the psychiatric category of Anxiety Disorders. The Syndrome is characterized by a cluster of signs and symptoms– psycho-physiological indicators – such as:

feeling angry much of the time

anxious

on-edge or irritable

unhappy in one’s own home

depressed and sad

worried

nihilistic (hopeless)

sleeping disorders and/or nightmares

fear of going to one’s own mailbox,

paranoia

fear of allowing one’s children to play in their own neighborhood

fear of having one’s car ticketed or towed

stressed out

hyper-vigilance

restlessness

fear of losing one’s pet

The cause of this disorder, according to Dr. Solomon, lies in,

[T]he HOA strategically begins to focus on the homeowner’s minor, if not non-existent infractions. The purpose for these attacks is to create an income stream. This income stream makes its way into the pockets of the management companies, collection agencies and attorneys, none of whom live within the community that they are harassing. Like ravenous parasites, these organizations feed off of fear-based harassment. The homeowner, now locked into a mortgage, feels powerless over the HOA’s relentless hounding for more and more money. In short: the evolution of schoolyard bullying and lunch money stealing has turned into adult comportment known in the legal world as, racketeering, financial exploitation and extortion, and neighborhood money pilfering.

I, myself, have been contacted many, many times over my 10 years of involvement by widowers, seniors, single moms and “youngsters” seeking a resolution to the stress caused by the harassment and ostracism by the HOA through its newsletter or verbal statements, the HOA’s assault on their persons or properties, or the HOA’s slanderous actions. The HOA, or management firm, or attorney do not return calls or answer questions. The homeowner gets just another letter from the attorney with its $150 fee tacked on to the stated monies owed the attorney. In one outrageous flaunting of absolute power, an attorney, who is also an outstanding CIA member, kept on dunning this senior women although she sent the attorney statements from her bank that the HOA had cashed her assessment checks.

These homeowners, who may have opposed the board or one it its friends, or was the target of an unsupported and arbitrary fine, feel helpless because the police, the county attorney, the consumer protection agency, and the attorney general offer no assistance. And when they do try to contact an attorney, and are not rejected because the attorney works for an HOA(s) and won’t take the case, they may find an attorney who will take the case with his standard upfront retainer fee payment of a few thousand dollars. These homeowners feel isolated and persecuted by the HOA board, and the failure of the supposed democratic process within the HOA, which requires participation by “civic minded” neighbors. These neighbors do not exist – “Not my problem”. They, too, also fear the retaliation through fines and liens for opposing the board, making HOA governance a mockery of justice and the democratic process.

Dr. Solomon will hold a seminar on the HOA Syndrome:

October 15, 2010

6:00 to 8:00 pm

College of Southern Nevada-Henderson Campus

Room C133

700 College Dr., Henderson, NV 89002

For more information please contact Dr. Robin Huhn: 702.812.4599

Read the poster.

TN firehouse adopts HOA philosophy — a business entity

If you haven’t heard, a Tennessee firehouse let a house burn down because the owner didn’t pay a subscription fee, above paying his general taxes. The firehouse is operating as a business: revenues = expenses. But, they are a public government entity and not a business!

CAI, in its efforts to avoid having HOAs declared a de jure public entity, and subject to constitutional restrictions, has confused the issue by treating the HOA as a privately contractual business. As I have explained many times (See in general, Understanding the New America of HOA-Lands), government is more than a business, simply based on their objectives — making a profit vs serving the people. The HOA legal scheme as a fascist style of constitution — the state comes first above individual liberties and freedoms, and the objective of the state is corporation/business based. The same as we see with the firehouse.

The purpose of our government is clearly stated in the Preamble to the Constitution, and by the Social Contract (see Understanding) whereby man surrenders his natural rights to government in exchange for protection of their unalienable rights against harmful factions in society, to provided for a smooth and organized functioning of society by setting rules and regulations, by caring for those facing hardships, and by punishing offenders of the society’s rules (criminal acts).

This incident is just but one incident of the blurring of the lines between institutionalized private HOA governments and public government. Our elected representatives are confused about the purpose of government. Government cannot be done away with under dogmatic ideological cries of “government intrusion”, but is necessary for justice, to protect our freedoms, and in no way can be seen as evil while subversive — opposing Constitutional government — HOAs are praised and mandated.