J. Patrick Sutton Cases & Issues Blog

HOA's Are Just 2d Mortgages By Another Name

I've been getting more calls from media lately about HOA problems, and it occurred to me that there are strong parallels between the mortgage industry and the HOA-Industrial-Complex:

1. When you get a purchase-money mortgage to buy a house, the bank takes your house if you don't pay. When you buy into an HOA, the HOA takes your house if you don't pay assessments. In essence, buy agreeing to be a "member" of an HOA, you are buying a club membership to use the pool, amenities center, roads, and common areas, but unlike a normal club membership, if you don't pay, you lose your house. My colleagues on the HOA side of the Bar will be happy to foreclose on you and then charge you many thousands of dollars to extricate yourself from their clutches.

2. The mortgage and HOA industries have consolidated into giant collection entities. Banks and HOA's both hire large, third-party corporations whose job is to collect your money, hit you with late fees and fines if you don't, and then take your home at foreclosure. Rumor has it that investors are ready and willing to learn about these foreclosures and pounce on purchasing such homes at foreclosure. In both cases, too, the would-be party in charge (Bank, HOA) is really just the tail wagging the dog. Banks don't hold mortgages any more; they're sold off and securitized, then held by trusts. Big HOA's can't be run by ordinary people, as a rule, so HOA's have to hire the big association managers, which are rapidly consolidating into big, faceless companies.

So when you think you're buying into a "community," think again. When you think you're getting a mortgage from a "bank," think again. The communities and banks are screens for wealthy, powerful entities whose sole aim is to capture a huge revenue stream from . . . ordinary people.
J. Patrick Sutton Cases & Issues Blog