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Homeowners associations begin foreclosing on bank-owned properties

A new trend seems to be emerging in at least one state in the wake of the foreclosure crisis. This blog has reported stories about the issues Ohio homeowners have faced in foreclosure proceedings. Other discussions on these pages have covered stories about homes being razed after foreclosure. But there is a recent wave in Florida where homeowners and condo associations have been turning the tables on lending institutions.

Generally, when a financial institution repossesses a home through the mortgage foreclosure process, the bank seeks to unload the home in a foreclosure sale. But with the apparent glut of foreclosed condos and homes in Florida, many of the foreclosed residences have stayed in the possession of banks. CNN reports that hundreds of homeowner and condo associations in that Southern state are turning to the legal process and placing liens on the homes, or foreclosing on the banks over unpaid association fees.

One firm that has initiated hundreds of cases on behalf of the associations says that the banks settle in 90 percent of the cases by paying the past due fees. But some mortgage holders apparently claim that they are only trustees for the property, and the mortgage servicing companies are responsible for paying to bills associated with upkeep, maintenance and any association fees on the properties.

But in a rare few cases, the foreclosure proceedings reportedly have proceeded through the entire process.

Many homes have been lost to foreclosure across the country in the past few years. While the issue with the association fees is in reality a small anecdote about the state of the housing situation, it tends to highlight the true depth of the problem.

Homeowners in Ohio who have gone through foreclosure may wonder why the banks have been so vehement in seeking to repossess homes as the nation experienced the economic downturn.

Current housing reports seem to suggest that the housing market is showing signs of improvement in many areas. But some homeowners continue to Struggle financially. Cincinnati area residents who continue to struggle with high debt loads, and potential foreclosure issues can speak with legal counsel to learn if the Bankruptcy Code can help in providing a fresh financial start. In some cases, bankruptcy can help a homeowner facing foreclosure to retain the home.

Source: CNN Money, "Payback time: Florida homeowners foreclosing on banks," Les Christie, Dec. 26, 2012

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