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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

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And I'm Melissa Block.

Now a story that will make you think twice about ever skipping a payment to your homeowners association. In many states, those groups have the power to foreclose on people who don't pay their dues and they're doing it more and more. In Texas, the number of foreclosure filings for delinquent association dues has increased tenfold in just the last few years.

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.

Captain MIKE CLAUER (Commander, Texas Army National Guard Unit): 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.

Capt. 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?

Capt. 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.

Capt. 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: Lawyers for the homeowners association say that while Captain Clauer's case is regrettable, it was his and his wife's fault for not paying their dues in a timely manner.

Patrick Whitaker represents the HOA.

Mr. PATRICK WHITAKER (Attorney, HOA): 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: In many states, it is not difficult for a homeowners association to foreclose on a member's home for past dues, even if the amount owed is just a few hundred dollars. And in 33 states, a homeowners association does not need to go before a judge to do it. It's called non-judicial 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.

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.

Mr. DAVID KAHNE (Attorney): I suggest you call the association and cry.

GOODWYN: Kahne says if a homeowner misses a couple of homeowner association dues payments, the 250 or $500 they owe often becomes $3,000 after the homeowners association's lawyers add their legal fees. It is not the homeowners association who has to pay the lawyer's bill, but the delinquent homeowner. If the homeowner wishes to contest and loses, they're on the hook for legal fees that could run deep into the double digits of thousands of dollars.

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.

Mr. 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)

Unidentified Man: Guys, our investigation found that the number of HOA foreclosures by subdivisions, like the Lookout Canyon Creek here behind me, are skyrocketing.

Tony Goodman's(ph) house is being taken from him.

GOODWYN: With the recession, the percent of foreclosure filings for delinquent HOA assessments in Texas has increased from between one to 2 percent of all home foreclosures to more than 10 percent, according to the industry. Over the last 20 years, homeowners associations have exploded across Texas. While there are 1,100 municipalities, there are now 30,000 HOAs. And HOAs have far more power than Texas cities or counties to take a citizen's home away from them.

The perception that the balance of power has swung too far toward homeowners associations has begun to permeate the Texas legislature. Reform legislation has passed the Texas House of Representatives, but still no bill has been able to make it through the Texas Senate.

Republican State Senator John Carona represents Dallas.

State Senator JOHN CARONA (Republican, Dallas): 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: In Texas, serving in the state legislature is a part-time job. In addition to representing Dallas, Carona owns the largest homeowner association management company in the country. Associa is in 30 U.S. states and Mexico, with more than 100 offices, 6,000 employees and 7,000 HOA clients.

Carona defends HOAs' right to foreclose for delinquent dues, even for small amounts.

State Sen. 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: There have been complaints that some members of homeowners association boards have bought for a pittance properties they forced into foreclosure, then sold them for a hefty profit. In Texas, there are no laws to prevent this.

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.

State Sen. 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.

State Representative BURT SOLOMONS (Republican, North Texas): 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: In theory, HOAs are only supposed to foreclose for nonpayment of dues. But Solomons says that through a loophole in Texas law, in practice, HOAs can foreclose for nonpayment of homeowners association fines, too. The North Texas representative watched with frustration last year as his reform bill died in the Senate.

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.

Capt. 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: If a federal court decides in favor of the Clauers, the foreclosure and subsequent sales of their home would have to be unwound and the deed returned to them. If they lose, the good captain's nice, paid-for, suburban home would be lost to his family forever. The case goes to court early next year.

Wade Goodwyn, NPR News, Dallas.

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