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Pay Your Mortgage and HOA Dues to Avoid Foreclosure

[Jun 18, 2009.]


Keeping up with monthly payments on a mortgage may not be enough to keep someone from being foreclosed upon if they don't pay their homeowner's association (HOA) dues. Thousands of Americans who have gotten behind on their dues are at risk of foreclosure, according to USA Today. Here are eight things to remember about budgeting for monthly payments on a mortgage and HOA dues.

  1. It's not fair for some homeowners to stop paying their dues while others carry the burden. HOA dues are for maintenance and upkeep of shared areas of a condo or housing community. The money may be used for mowing the grass, swimming pool maintenance, snow removal, security, etc.

  2. In addition to requirements for monthly payments on a mortgage, the purchase agreement signed by a homeowner may give a condo or neighborhood association the right to foreclose when dues aren't paid.

  3. Just as mortgage lenders will assess late fees when mortgages go unpaid, HOA boards may levy penalties and fees for unpaid dues.

  4. HOAs can fine homeowners for violating the association's rules—such as incorrect landscaping—which can increase the total amount owed.

  5. An HOA will attach a lien to property before initiating foreclosure proceedings.

  6. If a home is foreclosed upon, it will be sold and the proceeds will be used to pay off the mortgage and HOA dues.

  7. HOAs may be willing to work with homeowners who are experiencing financial difficulties to set up some type of payment plan. But people must contact their HOA to let them know they need help.

  8. Homeowners who are behind on their mortgages should contact their lenders to discuss options for refinancing or modifying a loan.

Unpaid Mortgage and HOA Dues

Foreclosures initiated by HOAs seem to be on the rise. For example, 19 Texas counties have seen a 30% increase in the number of foreclosure attempts by HOAs compared with two years ago, according to Foreclosure Listing Services of Dallas.

Some homeowners find a way to save their home rather than end up in foreclosure over unpaid HOA dues. But if too many condos or homes are delinquent on payments, some HOAs may see no alternative but to increase the amount of dues being charged to make up the difference. And in some cases, condo boards are starting foreclosures on properties that have already been seized by mortgage lenders but are still behind on dues.


About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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