The Dallas Morning News and NPR report that homeowners associations are foreclosing on members for missing their monthly dues, noting the infuriating story of a soldier in Texas who got his house sold out from under him while he was in Iraq.

It’s a perfect anecdote: The man’s depressed wife neglected to pay two HOA payments for less than a thousand dollars total and the association foreclosed on the couple, selling their $300,000 house for $3,500 in an auction.

NPR does the better job of turning this single anecdote into a broader story. It does that by looking at how the extremely powerful HOAs have extraordinary powers:

And in 33 states, an HOA does not need to go before a judge to collect on the liens.

It’s called nonjudicial foreclosure, and in practice it means a house can be sold on the courthouse steps with no judge or arbitrator involved. In Texas the process period is a mere 27 days — the shortest of any state.

You’ve got to be kidding me.

And it looks briefly at HOA management companies, which an attorney says “have been making millions off homeowners through this foreclosure process.”

“We’re having literally thousands of lawsuits filed over very small amounts of money,” Kahne says. “And those very small amounts of money rapidly become large amounts of money when the association attorneys add their bills.”

The only quibble I have here is that the two stories only presents the same single anecdote—one that was used in a short piece in Mother Jones a month ago. A couple of additional examples would have taken its already terrific story to the next level. The soldier’s story is apparently being pushed by a publicist. That’s fine to report on it—it’s a great story—but find other examples to bolster the case.

Sounds like a good project for some ambitious reporter out there, and it shouldn’t be hard to find. NPR actually has the data, reporting that (emphasis mine):

With the recession, foreclosure filings for delinquent HOA assessments in Texas have increased from about 1 percent of all home foreclosures to more than 10 percent currently, according to the industry.

That’s a this-is-news statistic—one that shows there are many more stories to be mined here. The Morning News has the on-the-ground data for the Metroplex:

For the first seven months of this year, homeowners associations in Dallas, Tarrant, Denton and Collin counties posted 1,625 properties for foreclosure, according to George Roddy of Foreclosure Listing Service. Associations can foreclose on a property for any rule violation, but typically it’s for not paying dues.

One thing to look at is the potential for corruption. You have extremely powerful HOAs that can foreclose on houses “with no judge or arbitrator involved,” which necessarily raises serious questions about due process. In the case NPR mentions, the HOA auctioned a $300,000 house for $3,500.

That certainly ought to raise eyebrows. The buyer turned around and flipped it for a 3700 percent profit. NPR says:

There have been complaints that some members of HOA boards have bought HOA-foreclosed properties for a pittance, and then sold them for a hefty profit.

Let’s see some more stories on those complaints.


Ryan Chittum , a former Wall Street Journal reporter, is deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.