Arizona, California, Florida, and Nevada are considered the ground-zero states of the mortgage meltdown. In Florida alone, more than 400,000 homeowners have been evicted from their properties. According to a recent CNN report, some banks are now receiving foreclosure notices from homeowners associations for failure to be good neighbors.
When banks take possession of a residential property in a foreclosure case, they are supposed to make silent promises to assume responsibility for the properties they repossess. This includes maintenance of the property and making payments to the homeowners associations; in essence, being good neighbors until a real estate investor or motivated home buyer comes around. In some cases, however, banks are neglecting their duties as homeowners and letting bills from the homeowners associations pile up.
Foreclosure in the Sunshine State is a judicial process, meaning that it must be resolved following the principles of due process in court. As a result, many Florida law firms are engaged in the lucrative practices of representing banks against delinquent borrowers. Other attorneys choose to practice foreclosure defense by representing the interests of homeowners.
Ben Solomon is a foreclosure offense attorney whose firm represents homeowners associations that are owed funds by banks who have evicted homeowners from their neighborhoods. When these banks fail to pay association fees, everyone suffers due to the shortage of funds to conduct maintenance. In normal foreclosure proceedings against delinquent borrowers, homeowners associations routinely join the proceeding in an attempt to recoup losses.
Million Dollar Claims
A homeowners association in Pembroke Pines, just north of the Miami-Dade County border, estimates that they are owed about $1 million in unpaid fees. Many of these delinquent neighbors are major banks like JP Morgan Chase and Deutsche Bank. According to CNN, Deutsche Bank recently settled a claim for more than $25,000 for failure to pay maintenance fees for more than two years.
At least one of these reverse foreclosures has ended up with the subject property going up for auction on the courthouse steps. That happened in Homestead, a southwest portion of Miami-Dade County, where a homeowners association pursued a foreclosure all the way to auction. The neighborhood group was able to recover more than $20,000 in overdue fees from subprime lender NovaStar.
While foreclosing against the bank may seem like fair retribution to some, these associations are often forced to forego maintenance or increase their monthly fees. Everyone is affected by these increases, which end up becoming very unattractive to visiting home buyers.