PORTLAND --The word “foreclosure” can be terrifying to any homeowner. In the past year, there were more than 2,000 foreclosures in Oregon.
But now, the threat of foreclosure is taking on a whole new meaning, thanks to homeowners associations.
HOAs in Oregon have the right, under statute, to foreclose on people’s homes for lack of payment to association dues. And it’s happening in Portland.
Normally, a foreclosure happens when a homeowner doesn’t pay the mortgage. It’s usually severely past due.
But what if you own your home free and clear? No mortgage, no payments and no banks.
As KGW found out, you’re still at risk for foreclosure.
It’s happening right now to Denise Kraft.
“I have owned this house since June 2010,” she said.
Four years ago, Kraft grabbed the American dream, paying cash for her home, with no mortgage and no payments.
Kraft now has a lien on her home and she’s says she’s facing a threat of foreclosure. Not by a bank, but rather, by her homeowners association.
“I'm free and clear. I'm the perfect target,” she said.
Kraft lives in Deltawood in Northeast Portland. Residents there told KGW it is home to the most dysfunctional homeowners association in the city.
Residents we spoke with say the homeowners association is out of control.
“I received threatening letters, telling me, ‘We will foreclose your property, we will garnish your wages, seize your bank account,’” said Albert Brown, who is one of forty-one homeowners in Deltawood.
Like Kraft, Brown said he has a lien on his home, put there by the homeowners association.
An argument could be made that both Brown and Kraft brought this on themselves. They admit they stopped paying their HOA dues, about $77 a month.
“They have a lien on their homes,” said Lorna Baxter, who has been the president of the Deltawood HOA for eight years.
Baxter says the HOA has done a lot of good, with infrastructure, streets and beautification. But, she admits, “Yes, they can foreclose.”
Experts told KGW that yes, HOAs can take your home.
“HOAs do have power under the statute to foreclose,” said Chris Tingey, an attorney who specializes in homeowners associations.
Attorney Alicia Beesley added, “You've tried every other option to get their attention and get them to pay those dues, what else can a board of directors do?”
Unit 8 asked Tingey if just the threat of a foreclosure from an HOA to a homeowner is effective. “It is an arm twister, yeah,” he said.
If that’s the case, a lot of people should expect liens and foreclosures.
Most of the people that live at Deltawood do not pay their HOA membership dues.
KGW asked President Lorna Baxter how many of the forty-one residents were delinquent.
“I would have to say, three-quarters, no kidding,” she said.
Among Deltawood homeowners, apathy is rampant. Most don’t come to the HOA meetings or even know the names of the HOA board members.
Residents say there’s a reason for that.
“This homeowners association has been in trouble for years and years and years,” said Kraft. “There's been embezzlement from past board members.”
Strong allegations, but even Baxter admits it’s true. Prior board members in years past ran up a six-figure water bill with the City and never paid it.
“There was no collection or financial organization in any way,” she said.
In the meantime, at $77.00 a month, Denise Kraft’s outstanding HOA dues are about $1,500.
But since the homeowners association sued her, she is responsible for the HOAs attorney fees. That adds another $17,000 to her bill.