As we all aware of, the current interest rate forecast is very cloudy because of the treasury yield. Since the beginning of 2009, the 10 year treasury rate has increased from 2% to almost 4%. There is little doubt that the 2% was way too low, but should we really be seeing a quick double in less than half a year. With the yield going up so quickly, it was only time before mortgage rates followed.
Many are learning to their surprise that condo and neighborhood associations that oversee security patrols, mow lawns, plant flowers and clean the community swimming pool may have the right to foreclose when dues aren't paid. That right is often written into the purchase agreement signed by the homeowner. Many homeowner associations have turned the job of collecting member dues over to outside management companies. And to them, it's strictly business, not personal.
Homeowner association boards and their management companies defend the practice, saying maintaining the neighborhood preserves everyone's property values. "We have compassion for those folks. At the same time, we feel for the rest of the homeowners who are paying their dues," said Andrew Schlegel, executive vice president for Merit Property Management, which manages more than 140,000 California homes in community associations.
"No one wants to do this," Schlegel said. "It's only coming up when people are completely obstinate about it."
In fact, most people end up saving their homes. Homeowner association boards — particularly those that have lost many of their dues-paying members to the housing collapse and the slumping economy — often work with down-on-their-luck neighbors to come up with some sort of compromise. Gauging the number of foreclosures nationwide by homeowner association is difficult. But in Texas, foreclosure attempts initiated by homeowner associations in 19 counties are up 30 percent from two years ago, according to Dallas-based Foreclosure Listing Services.
More than 59 million people live in more than 300,000 association-governed communities nationwide, according to the Community Associations Institute, the nation's largest group for homeowners and condo boards.
If the house is foreclosed on, it is sold off, and the homeowner association takes what it is owed from the proceeds. Proceeds also go to the bank to pay off the mortgage.
The foreclosure actions have renewed long-standing complaints that homeowner associations are often made up of power-drunk residents who enjoy lording it over their neighbors and zealously enforce the rules regarding such things as the height of the grass, the color of the house, the flying of flags and the way the porch is furnished.
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