The economy can change overnight, money markets can crash, local and state governments can topple, but in America, regardless of the tragedy, someone always finds a way to make money.
According to news articles, in Florida, where foreclosures are rampant and Home Owners Associations so prevalent, a group of ex-cons have figured out a way to take advantage of the slowdown in foreclosures.
Although the Fannie Mae deadline for completing a foreclosure is 450 day, Florida foreclosures can take over 600 days to foreclose on a property. Home Owners Associations (HOA), who stand to lose money from foreclosures, cannot collect HOA dues from clients who are in the foreclosure process and filing for bankruptcy. Many lawyers are currently encouraging the associations to file lawsuits to place liens on the homes.
Ex-cons have formed a group that buys the rights to the properties in lower courts for pennies on the dollar. One group recently bought 71 properties at foreclosure auctions for just over $220,000, but estimated at a normal market value of $8.2 million.
The auction purchases means the group can do as it wishes with the property, rent it, sell it, or live in it (at least until the mortgage company presses the lien on their loan). On average, the investment group hopes to retain ownership for about one year (given the current speed of mortgage company foreclosures in Florida).
Although legal, the practice is probably not ethical. If the investment group sells the property to a buyer or rents the property, there is no law in Florida requiring the investing group or HOA to tell the new buyer or renter there is already a lien on the property.
The silence of the HOA enables them to receive the revenue from the new buyer or renter to keep their association afloat. The investment group gets a return on their investment too, but the new buyer or renter may eventually lose because they could be evicted and/or foreclosed on.
Does Florida need emergency legislative action requiring the investors and/or HOA to reveal the potential loss to the new buyers? There is a law in existence called the Truth in Lending Act of 1968. The federal law was designed to create minimum standards for lending institutions and requires mortgage companies to disclose to their customers what they are getting for their borrowed money, but the HOA and investment group might be skirting this law because they are not acting as a lending entity.
Nevertheless, not making the new buyers and renters aware of the liens is just creating another opportunity for a new round of bankruptcies. Yes, we are still in difficult financial times, but silence is not always golden. In this case, I think it is unethical.
Bankruptcy laws can be complicated and if you are considering filing for bankruptcy protection, you might need legal assistance. If you need relief from debt and you live in or around the metropolitan area of Miami, Florida, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.
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