Those that live in Colorado believe that the state is great.  Colorado has held the distinction of being number one in healthy people, great hiking, and so much more.  One distinction that Colorado I'm sure didn't want - to be number one in foreclosures in 2006.

Why is it important to the Townhomes at Red Hawk community to know about the foreclosure rates in Colorado?  Foreclosures and bankruptcies within your community effect your community greatly.

Each time a bank gets a home back because of a foreclosure, the bank sells the home for what they have invested into it or the best offer.  Banks are not in the business to hold onto homes and wait for the value to go up - they are in the business to loan money and charging interest to make money.  When these sales prices are low, the comparibles for sales numbers for the community are lower.  This means those looking to purchase within the community sees a home that sold for lower than others listed and will try and negotiate the price down. 

If the homeowner that is foreclosed on owes money to the HOA for assessments, the HOA has their hands tied in what they can actually collect in past dues.  Per the community's collection policy, when a homeowner is behind in an amount equal to two month's worth of dues and late charges, the account begins moving towards the attorney for them to seek further legal collection procedures.  If someone is going through a bankruptcy or a foreclosure, they are usually having a hard time of it with their finances and we all know that getting "blood from a turnip" is difficult - so is getting money from someone that hasn't any.  So these owners are having a hard time, but they are receiving the benefits of the community's resources without paying for it if they are choosing not to put their duties to the community ahead of the car, the doctor bills, the housing bills, the food bills, the electrical, the credit card, and ...  There are some owners that are in a financially poor position but they choose to keep their dues current because they see the value they are receiving and don't want to see the rest of the community pay for their services - to them I say "Thank You!"

The attorney and the HOA must conduct collection procedures by following the fair credit acts and other laws to protect those that owe money.  Some remedies are to garnish wages, file a judgement in court, put the home into receivership, and others. 

Once notice to foreclose has been sent out from the bank though, the HOA has some recourse.  HOA assessments are first lien holders and collect up to 6 months of past dues from the bank that is foreclosing going back from the date of the notice.  This doesn't include late fees, but assessments are good to have.  Those assessments that go back further than 6 months from the notice to foreclose are still owed by the homeowner that has lost their property in foreclosure but you've lost some of the remedies available to collect these dues.  Many times these dues should be written off as the HOA most likely will not see them.

With bankruptcies, the court determines what the HOA is able to collect.  Sometimes the courts state that all past due dues are wiped out - the HOA then needs to write those costs off.  Sometimes the court determines that a portion is owed to the HOA and the receiver for the court collects the funds and forwards them to the HOA.  While someone is in bankruptcy proceedings and has not been discharged yet, the HOA and collection attorney have their hands tied in regards to what can be done towards collecting these fees.  The HOA can file motions to the court asking for relief but we are finding those costs are more than what is due so the Board of Directors must decide how much money to spend in these cases or what is budgeted.

Your Board of Directors, HOA Management Company, and collection attorneys do everything within their power to collect as many of the dues as possible.  What the community needs to remember is that foreclosures and bankruptcies do happen and there isn't anything that these three can do to stop them.  What we can all do though, is help out our neighbors and remember that even with hard times, keep paying your dues so your neighbors aren't paying for your water service, your trash service, and all of the other items that dues pays for.  By everyone paying, you will help keep dues from being increased to cover required write offs.