Here’s Some Really Unsavory Characters All Together in Texas Federal Court

Kingman Holdings, LLC v. Specialized Loan Servicing, LLC

(4:22-cv-00033)

District Court, E.D. Texas

JUL 29, 2010 | REPUBLISHED BY LIT: JAN 19, 2022

Frisco Soldier Gets Home Back After HOA Foreclosure

JUL 29, 2010 | REPUBLISHED BY LIT: JAN 19, 2022

“We’ve heard heartbreaking stories from people who have been fined for things that were questionable,” said state Sen. Jeff Wentworth, R-San Antonio, a committee member.

State Sen. Royce West, D-Dallas, who chairs the committee, said he hopes to use stories like that of the Clauers in the upcoming legislative session to make such foreclosures illegal.

“We were one vote short of having the bill put on the governor’s desk,” West said of previous attempts to change the law. “Now we’re working to make sure we understand the opposition, and we’re trying to get a clear picture of what they were opposed to in the bill and get those issues addressed.”

Homeowners associations say they need protections from people who don’t pay their agreed share of a neighborhood’s upkeep.

“It’s a fairness issue,” said Frank Rathbun, spokesman for the Virginia-based Community Associations Institute, which provides resources to the associations and other community groups. “They collect fees for services and amenities. … When enough people aren’t paying, it puts them in a bind.”

The Clauers’ attorney couldn’t say whether the couple had to pay any money to get back the house, which they owned mortgage-free.

The Heritage Lakes Homeowners Association was initially owed $977.55 in dues on the house. The association sent multiple notices by certified mail, demanding payment. All went unanswered.

Under Texas law, a homeowners association can foreclose on a property and sell it at auction to collect what’s owed.

The two-story brick home was purchased at auction for $3,201 by Mark DiSanti of Dallas and Steeplechase Productions. DiSanti sold it in May 2009 for $135,000 to Jad Aboul-Jibin of Plano.

Complicating the case was Michael Clauer’s service overseas. His wife said she had severe anxiety and depression over her husband’s absence and let mail pile up. She didn’t open any of the certified letters and didn’t realize the home had been sold until summer 2009, when Aboul-Jibin sent a letter asking for rent.

Hale had argued in court documents that the family was protected from foreclosure by the Servicemembers Civil Relief Act. The federal law protects those on active duty from certain financial and legal obligations, including foreclosure, without a court proceeding. Clauer was on active duty from Feb. 15, 2008, to Oct. 9, 2009, according to court records.

Attorneys for Heritage Lakes argued in court documents that because the house wasn’t in Michael Clauer’s name, he had no standing to sue under the federal act. The home was purchased by his wife’s parents and a portion was later transferred into May Clauer’s name. They also disputed the dates of his military service.

David Margulies, a spokesman for the homeowners association, said it routinely checks for military connections before instigating foreclosure proceedings. He said a letter from the military stated that Clauer was not in the service when the process began.

The homeowners association became a target of public outrage when news of the foreclosure spread nationwide. Association board members received death threats.

Shad Bogany, secretary-treasurer-elect of the Texas Association of Realtors and a Houston-based real estate agent, said homeowners associations need to be reined in.

“We’ve got elected officials not paying attention to the consumer,” said Bogany, who believes foreclosure should be the last step after all collection options are exhausted.

Merrick Garland @TheJusticeDept files Housing discrimination suit in Texas (against @CityOfArlington ) https://t.co/5rmf0shrQ1

In 5 days, incl @OfficialMLK3 holiday there’s already a consent order and judgment https://t.co/pjBibGHJfa

Trumps’ 12 yrs, zero relief for 2008 crisis pic.twitter.com/Wtl4HAb1ih

— LawsInTexas (@lawsintexasusa) January 19, 2022

“When there’s a disagreement, who else can they call? What’s the next step?” Bogany asked. “There is no next step. If the homeowners association isn’t responding, there ought to be a neutral mediator for people to go to with complaints.”

But homeowners associations need money to maintain neighborhoods. If dues and fines aren’t collected, sidewalks and streetlights may fall into disrepair.

And current legislation offers little choice between doing nothing and foreclosing, said Tamika Harris, president of Blue Creek Ranch Homeowners Association in Houston.

If a homeowner doesn’t respond to the association’s notices, there’s “nothing we can do,” she said. “The homeowner has to participate, and 99 percent of the time they do not. We can’t force you.”

State Sen. Dan Patrick, R-Houston, said future legislatures need to make sure that foreclosures involve court proceedings and that the legal process is not expensive for homeowners.

“I continue to be shocked at actions of some homeowners associations who do not seem to understand that a person’s home is their biggest investment,” Patrick said.

“Most homeowners associations would never do this, but we’ve got a couple groups out there that for whatever reason seem to be quick to pull the trigger. That’s unacceptable.”

New HOA Rules For Texas

JUL 5, 2011 | REPUBLISHED BY LIT: JAN 19, 2022

The Texas Legislature recently closed their 2011 session, including the passage of a new law aimed at regulating Homeowners’ Associations (HOA) with respect to association fees, liens, and foreclosures. The new legislation was signed into law by Governor Rick Perry on June 17, 2011 and will take effect on January 1, 2012.

SUMMARY OF THE NEW LAW

• Homeowners who are delinquent in the payment of their association dues must be offered an alternative payment plan prior to foreclosure proceedings

(see Part 1: Alternative Payment Schedules).

• Payments received must follow a specific priority when being applied to amounts owed

(see Part 2: Applying Payments)

• Collection agency fees can only be demanded after proper notice and the opportunity within 30 days to cure any outstanding debt

(see Part 3: Collections)

• New guidelines for foreclosure limit proceedings to debts owed for more than 60 days, with proper notice from the HOA. There is also now a mechanism for each HOA to remove the right to conduct foreclosure actions from their association rules

(see Part 4: Foreclosures).

The new restrictions are primarily aimed at assisting homeowners who are delinquent in their association dues.

The requirement to offer an alternative payment plan will allow delinquent HOA members the chance to cure their debt before more drastic measures are taken.

The new law also provides some relief from the payment of third party collection agency fees.

It also provides HOA members an opportunity to modify their guidelines with respect to foreclosures.

The new policy also could be beneficial to lenders who would no longer require HOAs to commit in writing and would have an opportunity to cure delinquent association liens before going to foreclosure.

PART 1: Alternative Payment Schedules

The new law requires HOAs to provide an alternative payment plan for members who are delinquent in their association dues. The plan must offer the opportunity to clear the debt within a timetable no shorter than three months.

Debts cleared under the alternative payment plan would incur no additional fees or penalties. Guidelines established by each HOA with respect to their alternative payment plans must be filed in the county records.

The law only applies to HOAs with more than 14 lots.

PART 2: Applying Payments

HOAs are now required to apply payments from association members in a prescribed manner. Any payments received must be applied to the amounts owed by the member in the following order:

Delinquent assessments
Current assessments
Attorney’s fees
Fines
Any other amounts owed

However, if a member enters into an alternative payment plan and then goes into default of that agreement, the association may apply the payment in any order they choose.

Part 3: Collections

HOAs will now have specific guidelines when utilizing collections agencies to collect amounts owed by members. Before assessing fees from a third party collection agency, the association must:

• Give written notice by certified mail to the member who is delinquent;
• Specify the amount delinquent and the total payment required to bring the account current;
• Provide the options available to the owner to avoid being turned over to collections;
• Provide at least 30 days for the owner to pay off the outstanding debt.

The owner will not be liable for fees from a third party collection agency if the fees are contingent on amounts recovered.

The owner will likewise not be responsible for collection fees if the collection contract does not require the association to pay all of the collections fees.

The law also prevents associations from selling or transferring its accounts receivable, except as collateral for a loan.

Post Edited: Judge Gregg Costa, Mortgage Fraud Prosecutor Post Financial Crisis, US District Judge for SDTX and https://t.co/mBUDlSIrNP

— LawsInTexas (@lawsintexasusa) January 14, 2022

Part 4: Foreclosures

HOAs will now be required to obtain a court order for foreclosure in order to foreclose on a property under an assessment lien.

The Texas Supreme Court will outline the specific requirements between now and January 1, 2012 when the new law takes effect.

In addition, foreclosures may not commence until 60 days have elapsed after the association provided written notice, including the total amount owed and the opportunity to cure the debt under an alternative plan.

A secondary effect of this portion of the new law is the elimination of the requirement that lenders ask associations to commit in writing to providing 60 days’ notice before foreclosure proceedings are to begin under the assessment lien.

In simpler terms, this means that lenders will be able to cure delinquent association assessment liens prior to going to foreclosure and it makes it easier by eliminating the step of having to request the 60-day letter from the HOA.

The right of the HOA to foreclose on a property may now be removed from the association’s dedication of rights by a vote of at least 67% of all property ownership interests.

In other words, HOA members may elect to remove foreclosure opportunities completely in the case of delinquent HOA dues with a two-thirds majority vote. The new law also states that a vote for this purpose may be petitioned by at least 10% of the voting ownership interests. This prescribes the procedure to get the measure before the entire membership so that associations cannot deny the opportunity to vote on such a measure.