HOA Foreclosure Dilemma

[RileyB]

I live in South Carolina and am not sure if the background information is relevant, but...

Our HOA initiated foreclosure proceedings against us last year, seeking $600 plus fees and costs. In their first service to us, the Complaint was missing several numbered pages in the middle of the pleading. We filed a request through the court seeking proper service and stating our intent to file a timely Answer upon receipt of same. Plaintiff determined that this request was our "Answer" and promptly demanded judgment be rendered. We did file a timely Answer, primarily seeking validation of the debt alleged to be owed. (We believed but were not sure that it was related to prior unpaid annual dues plus late fees.)

We also sought an accounting of the debt from our HOA, however they stated that any such request should be submitted to their attorney's offices and would be subject to additional attorney fees being charged to our account. We did not contact the attorney's office, as we did not wish to increase the debt alleged to be owed and trusted that the judicial system would proceed. No judgment was rendered in the case.

Before the case could proceed, however, our loan servicer (GMAC) paid the Plaintiff $3500. (Which of course is now charged to us.) We were frustrated because we did not receive our day in court, and the attorney fees were very excessive for even lender-initiated foreclosures in our area. There was no judicial review of the case, debt or attorney fees.

We believed the court case to still be open, however, until I discovered that that Plaintiff had filed a Cancellation of Lis Pendens/Stipulation of Dismissal in December 2012. We were never served or notified of this.

In January 2013, we received and paid in full our annual dues of $300. In March 2013, we received a statement from the HOA in the amount of $308.50. The invoice showed an original “over 30 days” balance of $446.00 and an unknown current “payment” of $137.50. In accordance with the FDCPA, we sent a letter to LOPCA requesting validation of the debt claimed to be owed. We received a response reminding us of our alleged overdue debt and the LOPCA’s right under the community association’s governing documents to assess legal fees to our account. In June 2013, we received a new invoice showing $308.50 to be over 90 days overdue and overdue fees in the amount of $90 added to the invoice, for a total amount claimed to be owed of $398.50.

We can only assume that the legal fees we are now being charged with originated with the foreclosure proceeding of last year. We feel those were paid in full (excessively!) and no further attorney fees should be charged to us. We have not contacted the attorney's office for fear of being charged additional fees.

Our state consumer affairs department was unable to assist us and urged us to contact an attorney for advice. We cannot afford an attorney and legal aid in our area does not cover issues such as these. I will graduate next year with a BS in Legal Studies and have stumbled along as best I can with my limited knowledge. We are starting to feel a little victimized here by our inability to establish the source or validity of the debt. Our hands are tied!

Do we have any recourse here? Can we seek to have the original foreclosure case reopened? Do we need to file a small claims case?

Thank you in advance for any insight or advice you can offer...it will be much appreciated.

 

[justalayman]

Ignore anything in the FDCPA. It applies to 3rd party collections. If the HOA is who is contacting you about a claimed HOA debt, that is 1st party collections and not covered by the FDCPA

 

[justalayman]

Doesn't your HOA have system in place to address disputes?

Have you contacted the treasurer directly to inquire about the bill with no stated justification?

 

[RileyB]

Actually, our HOA hires a separate management company and they are the ones who are seeking to collect this debt.

When we have contacted the management company about this, they simply referred us to their attorney's office, along with the implied threat of additional fees.

That is a good idea - I will read over the HOA covenants, etc. and see if any arbitration clause is included or some other manner of resolving disputes. I am quite sure there is not, though.

 

[justalayman]

IF the FDCPA applies (not convinced it actually does though) validation consists of little more than the collection agency contacting the original creditor and having them issue a statement confirming the debt: debtor and amoint. It is not a large hurdle and in your situation, undoubtedly going to support the claimed debt.

I would also obtain, if you do not already have it, documentation from your lender showing their payment to the HOA, what it was for, and that it wAs the full amount demanded.

 

[RileyB]

Hmm, that's another good idea but I am pretty sure they will provide the same thing. Our names and the total amount owed. It seems in foreclosures, there is no requirement to break down the debt claimed to be owed.

I supposed the first thing I need to determine is can a plaintiff continue to charge attorney fees arising out of a single cause of action wherein no judgment was rendered?

 

[justalayman]

the foreclosure issue is moot. What I was speaking to was getting, from your lender, exactly what they paid and what it was for. They are not going to just willy nilly write a check without support for the amount claimed. You must remember, the bank paid on your behalf to as to avoid the foreclosure. They cannot just go "you owe $$$$" without a basis for the claim. If they paid more than was required, well, too bad for them. They don't get to charge it to you and that is why they will have an accounting of what the debt represented.

I supposed the first thing I need to determine is can a plaintiff continue to charge attorney fees arising out of a single cause of action wherein no judgment was rendered?

they can charge whatever your bylaws allow them to charge. To your question of; can they continue to accrue legal fees for an action that not only has been discharged (the foreclosure) but the claimed debt paid (presumably in full) on your behalf by your lending institution. There should be no continuing fees associated with the foreclosure action.

 

[RileyB]

Thank you, your responses are giving me some additional avenues to explore! The problem with getting the information from GMAC is that I have three times requested a detailed history of our account. From GMAC, from their first counsel, and finally from their present counsel. Each time, I was given a completely different version of my payment history. Honestly, looking at them, you would think they were from three different accounts. (It was also very revealing; lots of unexplained charges to our account, checks held in order to assess late fees, etc.) In response, I requested detailed explanations of certain line items and they just plain ignore my requests. Whether under TILA, RESPA or FDCPA, they just blow us off.

And yes, in foreclosure courts across the country, the lenders and/or loan servicers are absolutely allowed to go " "you owe $$$$" without a basis for the claim." Judgments are rendered every day without even a cursory examination of the debt claimed to be owed. It's a turn and burn industry and the judiciary is willing to just sign off on it. I don't mean to be argumentative, but it's just how it is. Kudos to those few judges who are finally recognizing mortgage and foreclosure fraud, but the vast majority do not.

I agree with your reasoning that they cannot continue to charge fees for a legal action that has been discharged, but I cannot nail down any specific law that forbids it.

 

[justalayman]

And yes, in foreclosure courts across the country, the lenders and/or loan servicers are absolutely allowed to go " "you owe $$$$" without a basis for the claim."

Um, not unless the debtor allows such. Claims must be substantiated but again, you are missing my point. The lender is not going to blindly make a payment simply because somebody said "this is what you owe". They will have an accounting of what they paid and what it was for. If they don't, then I would make an argument they cannot apply it to your account as you are not liable for invalid charges/fees. Make them substantiate the charge as a valid charge against your account.

Judgments are rendered every day without even a cursory examination of the debt claimed to be owed.

that is the fault of the defendant for not demanding an accounting. It also is not applicable to your situation because these are not costs from a court order.

I agree with your reasoning that they cannot continue to charge fees for a legal action that has been discharged, but I cannot nail down any specific law that forbids it.

there is no law specifically. It is simply that you are not liable for a debt that cannot be proven to be your liability. That liability may result from the HOA rules or a law but regardless, there has to be a basis for you being found liable for money being owed to somebody else. No provable liability; no liability to make payment.

 

[RileyB]

Well, yes, you are right. The loan servicer involved does have an account of the amount paid and what it was for. It will consist of the dollar amount and "legal fees blah blah blah." This does not help my situation because no one will tell me WHAT the fees were for.

I learned a little more about the timing. In December 2012, the loan servicer paid the amount alleged to be owed and the HOA caused the foreclosure to be dismissed. The amount paid by the loan servicer actually resulted in an overpayment of $137.50. In January 2013, we received an invoice dated 1-1-13 and paid our $299 HOA annual dues. (Note that the credit was not shown on this invoice.) The legal fees of over $400 were applied to the account on January 17th, but we did not receive this invoice until March because they are sent quarterly.

I also found these statements in the fax transmission wherein the funds were originally transferred from the HOA attorney to the HOA: �This amount should pay the assessments through 12/31/2012 per the invoice.� It also states, �We are only bringing the delinquent assessments current.�

All this leaves me still not knowing how to proceed. These attorney fees were charged to our account after the discharge of the foreclosure suit and in the absence of any debt owed or debt collection activity. And of course we are now being charged $30 per month in late fees. I guess what I seek is two things:

Disclosure - what were the legal fees FOR?

A judge to tell me that it's lawful for post-foreclosure fees to be charged to me.

Or is there simply nothing I can do about this?

 

[justalayman]

I believe you will have to simply accept the legal fees are what they are. I was not suggesting you would be able to demand a specific accounting of exactly what they were for. Legal fees are legal fees. If your lender paid legal fees that were part of the claimed amount, that is the best you are going to get. I ws under the understanding that all you were getting was a blanket statement of the entire amount.


If you want a judge to tell you anything, it is going to cost you money. The actual question I have is: what are the post foreclosure fees for? If they are for HOA business that the lawyer was hired to do, then they may be chargeable. I cannot think of anything concerning the foreclosure that could generate fees other than actual additional work by the laywer for something such as additional work on dealing with issues after the actual foreclosure activities but stemming from those activities. You should not be charged for seeking an explanation of additional charges being billed to you though.

 

[tranquility]

I can't really help more than justalayman has tried so far as I don't really know all the facts or accounting of events. But, this was all fouled up from the start with the self representation.

Our HOA initiated foreclosure proceedings against us last year, seeking $600 plus fees and costs. In their first service to us, the Complaint was missing several numbered pages in the middle of the pleading. We filed a request through the court seeking proper service and stating our intent to file a timely Answer upon receipt of same. Plaintiff determined that this request was our "Answer" and promptly demanded judgment be rendered. We did file a timely Answer, primarily seeking validation of the debt alleged to be owed. (We believed but were not sure that it was related to prior unpaid annual dues plus late fees.)

We also sought an accounting of the debt from our HOA, however they stated that any such request should be submitted to their attorney's offices and would be subject to additional attorney fees being charged to our account. We did not contact the attorney's office, as we did not wish to increase the debt alleged to be owed and trusted that the judicial system would proceed. No judgment was rendered in the case.

The "request" that should have been filed is a demurrer. If there is a deficiency in the complaint that is what you file. A request for "proper" service is something that will go nowhere if there is a proof of service on the filing to the court. Also, stating "intent" is irrelevant. Then, with the purported timely filed "answer", asking for validation? The time for validation was long past and asking for it in an answer is not correct or going to lead to any information. An answer--answers. Affirm; deny; lacking information and belief, deny. Those would be great things to include in an answer. Many would go point by point down the complaint using one of those answers to the stated fact in their answer.

An "accounting" is something that should be sought if not included in the complaint. The process to do that is in discovery. The format to do that is either through interrogatories or a demand for production. From the way the OP writes, it seems he made a call to the HOA and asked for it. This is inappropriate for a represented party. Sorry the OP wants to save money by not including the attorney, but that is where a proper demand for discovery would be directed. (And, in the proper format.) The only reason I can imagine there was not a judgment in the case is because the bank paid the costs to keep from losing the property in foreclosure. They didn't pay it for themselves, they paid it for the OP. Of course the OP would owe the bank for it. He should be concerned he has not properly disputed the amount with the bank as yet because that amount may become fixed on an "account stated" basis. While I don't think there is a problem with that, it could be if the amount was actually incorrect.

Before the case could proceed, however, our loan servicer (GMAC) paid the Plaintiff $3500. (Which of course is now charged to us.) We were frustrated because we did not receive our day in court, and the attorney fees were very excessive for even lender-initiated foreclosures in our area. There was no judicial review of the case, debt or attorney fees.

We believed the court case to still be open, however, until I discovered that that Plaintiff had filed a Cancellation of Lis Pendens/Stipulation of Dismissal in December 2012. We were never served or notified of this.

You should have been served the notice. It's good it has ended because of how badly you screwed up this case from the start. Your day in court would have cost you thousands more with no hope of winning. That does not mean you owe the $3,500 as a matter of law. I think you do and fighting it in court will give you more in attorney and court fees because of your mortgage agreement probably having such fees being awarded to the winner in any litigation. Before you even think of challenging that amount, be sure you have a good sense of all the accounting going on.

As to the rest, as I said, I have no idea of the actual facts so can't really opine.

I understand times are tough. While I am not suffering in the way many are in this economy, I see many who are and know things happen that are beyond one's ability to fix. But, let me just say a few things. Look to Maslow's hierarchy of needs and focus on the bottom of the triangle in your spending. Food, water, shelter. HOA's are powerful and will take your house from you as easily as the mortgage company. You might review if it is time to move to a more affordable place. If you decide not to, recognize that is not a debt that can be paid next Tuesday for the fee today. Also, if money is so tight, get a budget together and track every penny. It seems like some of your complaint is dealing with the accounting of the situation and you have no idea where you stand. While some has to do with legal fees, the request for "verification" hoping to see what you owed and paid up front, shows me you're not tracking things well. If you have a smart phone (Which might be a money problem too. Look to the no contract services.) there are a number of free budget programs that help you track your spending. Get a file cabinet to keep all the paperwork you receive. Get a friend who is very organized to help you if needed. You are not going to get out of these issues without KNOWING where you stand. Do the work to know.

Also, if you go to court again over something and are not going to get representation, LEARN what to do. There are library books, websites and legal aid available to help those who are going to do it on their own. Do the work required to learn and put away foolish notions that the courts are going to allow you to talk to a judge in the hope he is going to show you mercy.

Good luck, I hope you can work through these problems.

 

[RileyB]

*sigh*

I know you seek to be helpful, but so many assumptions and negative stereotyping...

I am a law student (final year), have clerked for a state supreme court, have advised my state legislature on bills regarding mortgage and foreclosure fraud (as well as being an active advocate on these issues) and finally, am an ace at household budgeting. It may sound hard to believe, but some people DO encounter life circumstances beyond their control that necessitate living in austerity and making difficult choices.

So yes, I am very familiar with judicial proceedings and no, I haven't improperly managed my money. I am going to resist refuting each of the the inaccuracies in your post, but do thank you for the advice and the well wishes.

 

[TheGeekess]

*sigh*

I know you seek to be helpful, but so many assumptions and negative stereotyping...

I am a law student (final year), have clerked for a state supreme court, have advised my state legislature on bills regarding mortgage and foreclosure fraud (as well as being an active advocate on these issues) and finally, am an ace at household budgeting. It may sound hard to believe, but some people DO encounter life circumstances beyond their control that necessitate living in austerity and making difficult choices.

So yes, I am very familiar with judicial proceedings and no, I haven't improperly managed my money. I am going to resist refuting each of the the inaccuracies in your post, but do thank you for the advice and the well wishes.

Well, if you know so much, why are you here?

 

[tranquility]

*sigh*

I know you seek to be helpful, but so many assumptions and negative stereotyping...

I am a law student (final year), have clerked for a state supreme court, have advised my state legislature on bills regarding mortgage and foreclosure fraud (as well as being an active advocate on these issues) and finally, am an ace at household budgeting. It may sound hard to believe, but some people DO encounter life circumstances beyond their control that necessitate living in austerity and making difficult choices.

So yes, I am very familiar with judicial proceedings and no, I haven't improperly managed my money. I am going to resist refuting each of the the inaccuracies in your post, but do thank you for the advice and the well wishes.

Um...quite impressive. Now, why did you make so many obvious mistakes up front? Please explain to me:
1. Why you used the term "improper service" when the complaint was missing pages? As your Supreme Court has said:

As we have noted, �[w]hen the civil rules on service are followed, there is a presumption of proper service.� Roche v. Young Brothers, Inc., 318 S.C. 207, 211, 456 S.E.2d 897, 900 (1994). Once the plaintiff has demonstrated compliance with the rules, the defendant can rebut an inference that service was effected only by showing �that the return receipt was signed by an unauthorized person.� Rule 4(d)(8), SCRCP.

So, I'm assuming that when you said "a request through the court seeking proper service" you made a motion regarding a Rule 4(d) violation where the complaint was not served with the summons. But, since a "complaint" (per Rule 8)

shall contain (1) a short and plain statement of the grounds including facts and statutes upon which the court's jurisdiction depends, unless the court already has jurisdiction to support it, (2) a short and plain statement of the facts showing that the pleader is entitled to relief, and (3) a prayer or demand for judgment for the relief to which he deems himself entitled.

I'm thinking someone as wise as yourself would know something "missing several numbered pages in the middle of the pleading" would qualify as a complaint. But, I didn't see what was missing so I can't be sure. However, I still suspect a demurrer would have been more appropriate.

2. "Validation" has a particular meaning in debt collection that simply does not apply here so I will assume someone as competent as yourself knows that and only meant it as a general term and not as legal jargon. With that in mind, can one ask for and expect to get discovery in an answer in your state? Or, did you mean you lacked information and belief regarding the amount claimed, deny?

3. Who is the proper person to communicate with in a lawsuit against a represented party? While, as pro per, it doesn't really cause a legal problem--don't forget the rule if you ever become an attorney.

4. What did you think the outcome would be if you never did discovery regarding an accounting of what you owed?

5. When you say, "law student (final year)" I would assume you're taking the Bar next year. But, you earlier said you will "graduate next year with a BS in Legal Studies" which would more qualify you for a job as a paralegal. Which is it? Taking the Bar or no?