My Mother owns a home in Santa Barbara which she has made her payments on time and is not behind on her loan to the bank. My mother & Father before He passed away Unexpectedly in NOV.2012. They were behind on their HOA dues. During the BK they were told that the past Dues would be paid through the BK. They had started to make the HOA payments when the BK was discharged and then when my Father passed away my Mother found out that in fact that not all of the HOA fees were paid and they were keeping her checks. She then received a letter that she owes $13,000 in HOA + Fees & Late payments. And they told her she had to start paying $500 a month until it was paid off. My mother called them and explained that my Father had passed away and that she could not make $500 a month payments due to the decrease in the family income. She then asked if she could make other arrangements to pay. They told her to send them a letter stating what had happened and what she could afford. Months went by and they never responded to her. She called and called & e-mailed and nothing. Now she just recently received a letter stating that she Owes over $15,000 and that they are going to foreclose on her. (since Nov. she has been making the $150 a month HOA dues on time) The Bank had called and notified her that they received a notice from the HOA and they are on her side. She has no equity in the house & we were going to short sale, but then we realized now that the Renters pay everything that will make a $900.00 a month
profit which she really need that income to pay for the house she is going to live in. Can the Bank really stop them from foreclosing or is it just a waste of time? Should we proceed with the short sale? She only has a little over 30 days left until they set a sale date.
2 Answers from Attorneys
The bank cannot stop the HOA, but the HOA may not want to foreclose and take the home, subject to the existing mortgage. If you can rent the house for a $900 profit, each month, I would suggest that you work a deal with the HOA, using the profits. For example, you can use an extra $500 each month, from the rental to pay down the HOA's lien. There also may be an opportunity to negotiate a lesser amount, or you can get a home equity line of credit for the amount due, and pay that line of credit from the rental profits. These are just a few ideas. It would be a good idea to see an attorney, so that he or she can review all of the relevant documents, including the bankruptcy documents.
I'm confused. Weren't the HOA's back fees discharged by the bankruptcy?