MICHELE NORRIS, Host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.
MELISSA BLOCK, Host:
NPR's Wade Goodwyn reports.
WADE GOODWYN: Captain Mike Clauer was serving in Iraq last year, company commander of an Army National Guard unit assigned to escort convoys. It was exceedingly dangerous work - explosive devices buried in the road were a constant threat to the lives of Captain Clauer and his men.
MIKE CLAUER: We've had lacerated livers, broken femurs. Of course, backs blown out and things like from the EFPs and stuff that they've hit.
GOODWYN: Clauer was halfway through his deployment when he got a frantic phone call from his wife, May, back in Texas. It was a bolt from the blue.
CLAUER: That's when she was bawling on the phone and everything and was telling me that the HOA had foreclosed on our house and it was sold. And I couldn't believe, you know, that could even happen.
GOODWYN: The Army captain had a hard time understanding what his wife was saying. His $300,000 house was already completely paid for. Could it be possible that their home was going to be foreclosed on and sold because his wife had missed two payments of their homeowners association dues?
CLAUER: So I was really in a hurry trying to get home before my family was living on the streets.
GOODWYN: But by the time Mike Clauer got back to Texas, it was too late. Their four-bedroom, 3,500-square-foot home had been sold on the courthouse steps for outstanding homeowners association dues and legal costs. Total: $3,500. The new owner quickly sold it for $135,000, netting a tidy profit.
CLAUER: Basically, it's everything to us. I mean - you know, I mean, having a house like this paid for was huge for our retirement plans.
GOODWYN: Patrick Whitaker represents the HOA.
PATRICK WHITAKER: But the fact of the matter is, the laws of the state of Texas allow homeowners association to file assessment liens on properties who haven't paid their assessments, and they also allow foreclosure on those liens. And the homeowners association followed the letter of the law.
GOODWYN: David Kahne is a Houston lawyer who advises homeowners. Kahne says that in Texas, the law is so weighted in favor of homeowners associations that he advises people that instead of hiring him, they should call their HOA and beg for mercy.
DAVID KAHNE: I suggest you call the association and cry.
GOODWYN: Kahne says that as the economy has gone under, homeowner association management companies and HOA lawyers have been making millions off of homeowners through this foreclosure process.
KAHNE: We're having literally thousands of lawsuits filed over very small amounts of money. And those very small amounts of money rapidly become large amounts of money when the association attorneys add their bills.
GOODWYN: Suddenly faced with a demand that they pay $3,000 immediately or lose their home, many disbelieving homeowners don't know where to turn. Some call their local TV news who they believe will share their outrage, and they're right.
(SOUNDBITE OF NEWS CLIP)
HOA: Tony Goodman's(ph) house is being taken from him.
GOODWYN: Republican State Senator John Carona represents Dallas.
JOHN CARONA: Remember, associations are a collection of neighbors. The goal has to be to work well together to have a harmonious community and to create a lifestyle that people enjoy and want to be a part of.
GOODWYN: Carona defends HOAs' right to foreclose for delinquent dues, even for small amounts.
CARONA: If an association did not have a means, a forceful means to collect that money from any homeowner who, for whatever reason, couldn't pay, well then it really places an unfair burden on every other owner in that association.
GOODWYN: Carona says the best way to address this apparent conflict of interest is not by passing new state laws, but by letting the HOAs handle it internally through modifications to the homeowners association constitution.
CORONA: I think that an association can avoid that type of thing by simply adopting conflict of interest rules.
GOODWYN: Republican State Representative Burt Solomons from North Texas has been trying in vain to pass HOA reform legislation. Solomons says during state legislative hearings, there was no shortage of outraged homeowners, but he acknowledges the HOAs, their property management companies and their lawyers fought back effectively.
BURT SOLOMONS: We have people who would come and testify that would say, well, we need the power to access and fine and foreclose, and we need the money. And we look for people in violation of the rules and restrictions that we put in place. And they drive around in golf carts looking for them.
GOODWYN: As for Army Captain Mike Clauer, he's gone from fighting in Iraq to fighting his homeowners association in Texas. If he weren't in the military, Clauer would have no legal recourse at this point. But in a spasm of gratitude in 2003, Congress passed the Servicemembers Civil Relief Act, which was supposed to prevent non-judicial foreclosures against military personnel fighting overseas.
CLAUER: Hopefully, we're going to get the house back. That's what we're fighting for, that the judge will understand what had happened, that this was illegal, that the HOA can't do what they had done.
GOODWYN: Wade Goodwyn, NPR News, Dallas.
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