There Has To Be A Hell To Hold These Lawyers For Eternity

NPR reports one of the most abusive real-estate scams ever: Homeowners associations with non-judicial foreclosure language in their covenants, which allow the association to foreclose and sell 300k homes over a $300 delinquent monthly payment of HOA dues.

Capt. Mike Clauer was serving in Iraq last year as company commander of an Army National Guard unit assigned to escort convoys. It was exceedingly dangerous work — explosive devices buried in the road were a constant threat to the lives of Clauer and his men.

He was halfway through his deployment when he got a bolt from the blue — a frantic phone call from his wife, May, back in Texas.

"She was bawling on the phone and was telling me that the HOA [homeowners association] had foreclosed on our house, and it was sold," he says. "And I couldn't believe that could even happen."

Clauer had a hard time understanding what his wife was saying. His $300,000 house was already completely paid for. Could it be possible that their home was foreclosed on and sold because his wife had missed two payments of their HOA dues?

In many states it is not difficult for an HOA to foreclose on a member's home for past dues even if the amount owed is just a few hundred dollars.

"I was really in a hurry trying to get home before my family was living on the streets," Clauer says.

Sold For A Steal

But by the time he got back to Texas, it was too late. The Clauers' four-bedroom, 3,500-square-foot home had been sold on the courthouse steps for just $3,500 — enough to cover outstanding HOA dues and legal costs.

The new owner quickly sold it for $135,000 and netted a tidy profit.

Millions of dollars are being made on this particular scam. All the HOA management firms have to do is monitor, swoop in, and clean up. Assign the collections to a friendly law firm, use straw buyers to pick off properties, quickly auction them off, everybody walks away with their pockets lined. Sure as hell beats working for a living!

OS noted some deeply reduced prices for beachfront condos outside of Jacksonville. Lots of empty units laying around these days. If the covenants include this sort of nonsense, they need to stay empty. The developers (and their bankers and lawyers) can eat them until they starve.

It's about the culture. An economy based upon 'I-get-to-scam-you-cuz-I-can' will inevitably grind to a halt, and this may be what we are witnessing.

OS realized over the past few years that he had simply become inured to it, bit by bit, one scam after another, actually had unconsciously trained himself to look for the scams hidden in the sales pitches and legalese. Some were simply breathtakingly audacious.

More than once, he found he had stumbled into business situations that were fronts for laundering drug money; learning in retrospect that these respectable folks in their nice big houses, members of large local churches, were in fact up to their hips in it, and had not a moment's pause over it. All that mattered was the money, pure and simple. Lives were disposable, money was precious.

There has to be a hell. Pastor Bonhoeffer, Mother Teresa, Archbishop Cranmer, Muggeridge, Lewis, Dickens and a whole unnamed host of saints cannot possibly be sharing eternity with the lawyers who drafted and enforced these covenants against this family.