Federal Aid for Homeowners--Nabbed by HOA Debt Collectors

See the op-ed on this topic, posted on September 22, 2021, "Pandemic a Boon for Debt Collection Attorneys" at MARYLAND MATTERS. (Note 1) We get into some of the details, a bit more, in this blog ...

As summer ends, economists report that most Americans have done okay, specifically because of the federal aid devoted to them during the pandemic. Our tax money is returned to us in a time of need. That's good. But the "delta variant [of the corona virus] undoes expectations; hiring and consumer spending slow in the face of fresh uncertainty." (Wall Street Journal, Sept 7, 2021) Also, historically marginalized groups in our society are not doing well. We are a species at war with a biological agent. How does that impact your behavior? How do you treat your neighbor? What do "patriotism" and "sacrifice" mean to you?

At this point in time, in late September 2021, with the pandemic still ongoing, things are murky for folks in Quail Valley, Maryland, especially for homeowners who owe pandemic-era debts to the HOA (and/or its debt collector), and for renters who owe rent. The U.S. Supreme Court ended the CDC's eviction ban on August 26. Federal unemployment programs (related to the pandemic) ended on September 6.

What Happens Next?

Federal aid for homeowners is being distributed by the states. Starting in October 2021, the State of Maryland will post applications where homeowners (who have fallen behind on their mortgage and/or HOA assessments during the pandemic) can apply to receive federal funds. Maryland received nearly $250 million for this purpose under the federal American Rescue Plan. Check out the state's Homeowner Assistance Fund (HAF) webpage for updates. (Note 2)

One thing is as clear as daylight. Residents are observing how the HOA and its vendors are piling on violations, fines, and fees upon the backs of distressed homeowners. The HOA industry is in position to "cash in" as soon as financial aid becomes available. Much (maybe most) of the aid will not reach the hands of the average Americans who actually need it, but will be diverted into the pockets of the debt collection attorneys. They know how to play this game. For the residents, catching up on rent or HOA dues is the least of it. The game is all about all the fines and fees you will have to pay. See a few examples from Quail Valley here and here.

Whether piling on fines and fees is legal (in light of pandemic-era laws to protect citizens from extortion) seems of little concern to the debt collection attorneys. The game is on. Please see another typical example cited in the MARYLAND MATTERS piece.

Who is in Debt to the HOA, and Why?

Let's take all of Quail Valley, as an example. It's a Maryland community of 592 homes. Today (9/15), about 40 families in Quail Valley are on the “collections report.” (Note 3) That's about the same number as last year (reports the HOA), and we are glad it has not increased, but we are still riding the wave of 2020 federal aid to families. That "economic lift" will not extend into 2020.

Let's not lump these people who owe debts all into one bucket. Instead, let's ask some questions.

(a) How many of these debtors represent homeowners who are in distress, who simply cannot afford the mortgage and HOA assessment during the pandemic? Fact: The pandemic is still ongoing, and many families are still struggling or recovering.

(b) How many represent homeowners burdened with absurd and abusive HOA violations, fines, and fees?

(c) And finally, how many of these entries represent absentee landlords or homeowners who have, for years, failed to maintain the house and failed to pay the HOA assessment?

Those are three very different categories. If the HOA board of directors care about fairness, they will treat each category of homeowner very differently. But we don't even know the scope of the challenges here.

Can the board inform the residents? The HOA board could report the number in each category to the public, which can be done without revealing names or addresses. We all need to know what is going on, and how the government is treating the citizenry. This is called transparency and accountability in government.

A Convenient Confusion

There is no way to answer many important questions with regard to the ongoing methods of the predatory HOA industry. This is a local, state, and national problem. How the whole corrupt system operates is “kept under wraps” because of debt privacy laws. On collection reports, the homeowners’ names and addresses are redacted. Neighbors can't locate them to talk to them. They can't find each other.

The enforcers, however, (the HOAs and their vendors--the property management companies and the debt collectors) know very well who is who. They intimidate the homeowner in a dark closet. There is no way for people suffering abusive charges and debt collection to break out of the closet, to examine the wider set of facts, and to organize politically or legally to end this “legal racket.” Law firms are often reluctant to take on these cases pro bono, and few homeowners can afford litigation. There is no efficient way for journalists or elected officials to find out what’s going on. It’s a tidy little system. Quiet. Efficient. In the history of this nation, we have seen this kind of thing before.

The Many Facets of Reform

What is the remedy? We, the residents of Quail Valley, have petitioned our board of directors to fire the property management company and hire a new one as soon as possible. There are 118 signatures on the petition (9/22/2021), which is an impressive start; our community has 592 homes. We also need county and state officials to step up to the plate and halt HOA-industry abuses that are creating unnecessary debt and housing insecurity today for what must be tens of thousands of families in Montgomery County alone. Economists predict that things will get tougher next year. Let's get to work.

There is the petition. Also, more than 60 families are part of the Quail Valley Friendly Team, which seeks a more compassionate neighborhood HOA. We've met twice with State Delegate Leslie Lopez. Residents are calling the fair housing attorneys at CASA and at other agencies and sending their testimonies to county, state, and federal officials pleading for guidance and intervention. As homeowner debts accelerate in the coming months, and housing insecurity grows, so must we grow our efforts for economic justice. There is a better way to get through these times together. Notice that word: together.

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Note 1.

Steven S. Lapham, "Opinion: Pandemic a Boon for Debt Collectors," MARYLAND MATTERS (September 22, 2021). Visit www.marylandmatters.org

Note 2.

Del. Lesley Lopez has helpfully reported to her constituents:

If you need assistance paying your rent and are at risk of eviction, there are several resources you can reach out to. To do a quick search of local rental assistance programs, you can use this tool.

MD Foreclosure Prevention / Mortgage Assistance: If you are at risk of undergoing foreclosure, there are several programs available to you including the Maryland HOPE Hotline: 1.877.462.7555, the Maryland Homeowner Assistance Fund and Housing Counseling: HUD Approved Housing Counseling Agencies

Landlord Assistance: If you are a landlord whose tenant has suffered income loss due to COVID-19, you can apply to the rental relief program offered by the county on behalf of your tenants. You can find the program here. [A number of families in Quail Valley are renting the houses they live in.]

Note 3.

Many more (than these approximately 40 homeowners) are likely "on their way" to being in deeper debt to the HOA or its vendors. Data are hard to come by, so it's hard to know how many.

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Read all of the Chapters of "Living on Cuckoo Court" at tinyurl.com/CuckooCourt.
Read about condo and HOA "dysfunction, corruption, and abuse" all across America at IndependentAmericanCommunities.com.