Foreclosure Risk for Late HOA Dues

From KXAN, April 16, 2009...

How would you like to lose your $250,000 home over not paying your homeowner's dues?

It is a closer reality for Mark Lyne, an insurance agent, in Williamson County. Lyne received a letter last week from his Homeowners Association in the Woods of Brushy Creek subdivision in Northwest Williamson County, that said the HOA intends to foreclose if he does not pay his $1,267 fine.

"So they're going to come and take our $250,000 asset so they can get their $1200," said Lyne.
Lyne, who lost his job in 2005, has admittedly faced financial difficulty. He admits not paying his dues because of other choices in his life.

[Ed. Note: In 2002 a $500,000 home in the well-to-do Houston subdivision of Champion's Forest was foreclosed and sold at auction by the HOA for lack of payment of the $814 HOA dues.]

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Three words to stall foreclosure: 'Produce the note'

From Blogging Stocks, February 27, 2009...

Are you in foreclosure proceedings? If so, you can stay in your house longer than you might have thought. All you have to do is tell the bank to hand you a copy of the mortgage contract that proves you are on the hook to pay and specifies the terms of the foreclosure. As long as the bank cannot deliver you that contract, you can stay in the house.

I am not a lawyer; nor am I going to play one here. But if you tell the bank to "produce the note," it must deliver you the paper copy of the contract. And thanks to the way the mortgage market has changed in the last few decades, that simple request could be difficult to fulfill. That's because most mortgages used to get sold to investment banks who packaged them into mortgage-backed securities and sold them to investors around the world.

The punch line is that your mortgage contract is very unlikely to be sitting in the offices of the person who got you to fill out the paperwork. It could take some time to find out exactly who has the contract. And while the bank is searching, you can stay in the home. The produce-the-note movement started in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.

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