HOAs embrace fast-track foreclosure bill
Article Courtesy of The Herald-Tribune
By Zac Anderson
Published May 16, 2013
Gary Walsh is tall, but the weed is taller. It sprouted up recently amid the overgrowth thriving on property in foreclosure near Walsh's home.
Knee-high weeds border the driveway, but the six-footer casting a shadow in the front yard may be the ultimate eyesore. As president of the Meadow Walk Homeowner's Association, Walsh finally decided enough was enough.
condominium associations are some of the most ardent advocates for the fast-track foreclosure bill that passed the Legislature last month.
Lobbyists for the associations are urging Gov. Rick Scott to sign the controversial bill.
But critics say the legislation erodes homeowners' legal protections. There are also concerns that giving homeowners' associations more power could backfire, complicating and delaying cases instead of speeding them along.
Walsh had one message for Scott last week.
"Sign it," he said. "We have to move on with our lives."
The legislation makes a number of changes to foreclosure law, but one of the most significant is a provision that empowers homeowner and condominium associations to intervene in the court process and ask for a final judgment.
Supporters say the new authority could help speed a process that can drag on for years — typically because of bank delays or homeowner legal maneuvers that keep a case open without resolution — and deprive associations of the dues they need to maintain communal property.
Florida has thousands of homeowner associations that help pay for everything from clubhouses to community pools and landscaping, extras that allow people of various incomes to enjoy a piece of paradise.
But many associations have struggled to pay their bills in recent years because of foreclosures.
Data compiled by the Legislature shows the average Florida case takes more than two years to complete, double the national average.
That is contributing to a backlog of 352,890 cases yet to be finalized statewide, including 15,581 in the judicial circuit covering Sarasota, Manatee and DeSoto counties.
Homeowners in foreclosure often stop paying their association dues, forcing everyone else in the community to make up the lost revenue.
"It's a style of living based on everyone paying their fair share," said Douglas Wilson, president of AMI Advanced Management Inc., a company that helps manage 140 associations in Sarasota and Manatee counties.
Meadow Walk and other communities have increased association dues in recent years to compensate for neighbors who stopped paying.
"Probably 90 percent of the communities we represent have had to make a budget adjustment to deal with the problem of foreclosures," Wilson said.
Residents of communities hit by foreclosures are eager to lower association dues and put the problem behind them, Wilson said.
But it remains to be seen if having associations more involved will help the process.
Association leaders in many communities are likely to jump at the opportunity to intervene in foreclosure cases, but some attorneys say they could actually extend the process in some instances.
Simply calling for another hearing may not accomplish much if important evidence in the case is still missing, said Alice Vickers, an attorney representing groups lobbying against the fast-track foreclosure bill.
The question is "if that's just going to create an extra hearing where the judge is going to find the file is not complete, or the bank will refuse to comply, and we're at the same stalemate where we are now," Vickers said.
Scott Petersen, an attorney with Becker & Poliakoff in Lakewood Ranch who handles foreclosure cases for homeowner groups, acknowledges the new law is not a silver bullet for associations.
"The problem is going to be in those cases where that proof isn't part of the record yet," Petersen said. "Maybe the original mortgage note isn't on file or there's some other defect in the pleading."
Petersen estimated that fewer than 50 percent of foreclosure cases will be affected by the legal changes but added, "we'll take what we can get."
Some viewed Walsh as too confrontational when he first got involved with the Meadow Walk Homeowner's Association in early 2007.
The retired accountant printed a spreadsheet showing which residents were delinquent on their association dues, rolled up copies and wedged them into every neighbor's door handle.
One sued for defamation. A board member resigned over concerns about the aggressive tactics, Walsh said. He was undeterred.
The unpaid dues were an early warning sign.
Many of the properties eventually fell into foreclosure. Nearly half of Meadow Walk's 65 homes went through the process, Walsh said.
Property values fell by 25 to 50 percent. Homes in the community typically sell for $200,000 to $300,000 now, roughly their value when first built a decade ago.
The impact on property values might have been worse if the association failed to keep pace with landscaping and other maintenance.
The association had just $2 in its checking account when Walsh became board president in late 2007, he said, forcing an increase in annual dues.
Today, dues are back down and the account balance stands at $43,000, allowing the community to contemplate repairs to common areas.
Walsh became an expert at wrangling thousands of dollars in delinquent association dues from homeowners and banks. The experience has hardened his attitude toward homeowners in foreclosure.
Walsh, 69, grew up in New Jersey in an Irish Catholic family of "priests, firemen and policemen" and has served as an elder in St. Margaret of Scotland Episcopal Church in Sarasota. Tall and hefty, with a white mustache and gregarious disposition, Walsh said he believes in helping the less fortunate.
"But when you evaluate a lot of these people they are not the less fortunate," he said, adding "they make you feel not as sympathetic as you would like to be."
Walsh argues that many of the Meadow Walk homeowners in foreclosure lived beyond their means, bought homes they could not afford or over leveraged their property with second mortgages and lines of credit.
"Keeping up with the Joneses," he said, noting that even in foreclosure, some have continued to buy new cars and other "toys."
Vickers said every homeowner's situation is different and blanket judgments are not productive. Many homeowners want resolution too, she said, and feel stifled by the banks.
"It's incorrect to just think of this as a large body of people trying to live in their homes for free," she said. "Those aren't the people I'm seeing."
Still, sympathy for homeowners in foreclosure seems to be waning years after the Great Recession officially ended.
Walsh unanimously won reelection as association president in 2009 and 2011.
"The good people are thrilled because I actually lowered their annual fee back down."