In reading the Carpenter Hazlewood (CHDW) October 28, 2011 eNewsletter, Lien Foreclosure: Is it Still a Viable Option?, I asked myself : Did the CAI attorneys lack “candor toward the tribunal” (as required by attorney Professional Conduct Rule 42, ER 3.3, as can be found in all states) when opposing foreclosure reforms all these years? It seems that CAI presents more than one personality, more than one face, depending upon its audience. CHDW (and CAI firm Ekmark & Ekmark) had vehemently opposed foreclosure reforms as far back as 2004 when, in Arizona, HB2402 sought relief and justice for homeowners. Never once did the legislators hear what is now admitted to in this article by Ms. Patel.
The following excerpt from Who prosecutes on behalf of homeowners in HOAs? (2010) reveals the attitude of CAI lawyers in 2004. Through the questioning and testimony of Ms. Koepke (Ekmark & Ekmark) by the FMPR committee in February 2004 (based on the audiotape record of the committee hearing), we learn,
In her testimony Ms. Koepke had stated that she was an ethical person of integrity who foreclosed only as a last resort upon the instructions of her HOA clients. However, she had a problem with making use of alternative methods of collecting debts as are available to all lien holder in other arenas, and saw no moral issue with completely stripping the homeowner of all his equity for a few pieces of silver. Her justification was that they were “scofflaws” who needed to be punished to deter future untimely payments. In the complete audio, you will hear the committee Chair informing Ms. Koepke that such actions were “unconscionable.” I added a commentary as an addendum, which presented a few background cases and incidents in which Ms. Koepke was involved. This short commentary video can be found at Foreclosures.
A few important questions not answered by the CAI attorneys are: 1) Why should the HOA be allowed foreclosure rights when it has not advanced any real, hard cash like a bank or other lender? 2) Why aren’t alternative means of collection, as available to all other entities, not satisfactory? and 3) Why this special right for HOAs?
The current Patel article, addressed to HOA directors and managers not the legislators, shows another attitude toward HOA foreclosure.
Assuming foreclosure eligibility requirements are met, whether foreclosure is a viable option depends largely on what other liens, interests, and encumbrances burden the subject property. . . . If the property is not subject to a mortgage or there is a minimal first mortgage, foreclosure is a viable option as there is likely equity in the property. . . . Even if the property is subject to a recorded first mortgage and there is no equity in the property, foreclosure still may be a viable option. Sometimes the threat of foreclosure alone is enough to get a delinquent owner’s attention. . . . the owner will often pay the association in order to keep his/her home.
This is an admission of the discriminatory nature of the foreclosure process — works only if the homeowner was an upstanding citizen who had paid his mortgage and assessments for many years, and had created all that equity that the HOA now seeks. It is also an admission of the punitive and intimidation motives of the HOA — “the owner will often pay the association in order to keep his/her home” — without facing the reality that “you can’t get blood from a turnip”! What the foreclosure process does do, and is not mentioned by these CAI attorneys, is that the attorney can claim fees many times in excess of the amounts owed the HOA.. So, who really benefits? Is this good public policy?
Important questions for all homeowners:
1. What are the CAI attorneys telling your legislators today?
2. Are they being candid with the legislators, or are they pursuing their — the CAI, not the HOA – personal agendas?
3. What are you doing to make sure the legislators are being given the whole story?
For further reading . . .
Special Message to McCain and Obama on Homeowner Protections in HOAs
Right to Foreclose laws are supposedly good for HOAs, so why are fees increasing?
HOA Constitutional Government 