Category: HOA foreclosures

SCA Board secretly sold a dozen houses in 2014

A 2017 study conducted by the UNLV Lied School of Real Estate, commissioned by the Nevada Association of Realtors, studied 611 HOA foreclosures between 2011-2015. 

SCA’s 2014 Foreclosures WERE NOT IDENTIFIED in the UNLV Study

Somehow the professionals conducting the study missed ALL of SCA’s 13 foreclosures between 2011 and 2015.

Ten HOAs had 1/6 of the 611 foreclosures UNLV studied.

Why didn’t UNLV know about SCA’s 13 sales Red Rock conducted?

SCA had 13 foreclosures in 2014, but SCA is not in the UNLV HOA foreclosure study’s list of HOAs that had more than five foreclosures from 2011-2015.

Notice a pattern?

ALL SCA foreclosure buyers were knowledgeable speculators.

Some would call them “vulture investors”.

This pattern – selling for a dime on a dollar to a few wise guys – would never have happened if bidding had not been suppressed by a few unsavory practices:

  1. Convince the HOA Board that they must keep everything about foreclosure secret,
  2. have no agendas or minutes of HOA Board actions to foreclose
  3. give no notice to the owner whose house is being sold
  4. Allow the manager to be the debt collector and control EVERYTHING about the money that’s collected for the benefit of the HOA members
  5. Allow the debt collector full, unilateral, unsupervised proprietary control all the records and processes, so the HOA has no independent records;
  6. give away signatory control over bank accounts of HOA money collected,  
  7. allow the debt collector to use the HOA attorneys against a homeowner who complains
  8. allow the debt collector to lie about notices that were given.

At Sun City Anthem, not a single homeowner knew when or where RRFS was selling these houses.

NOTICE A PATTERN? FOLLOW THE MONEY

In the case of 2763 White Sage, RRFS intentionally WITHHELD notice to ALL parties with a known interest – and then lied about it in order to cover up how this scam works to enrich the chosen few..

Look at who bought the houses. Look at how much they paid, and look at what Sun City Anthem Board and owners were told. It’s quite a lucrative scam for a lucky few.

One way the debt collector runs the con

See Irma Mendez’ 11/12/18 sworn affidavit regarding Joel Just, former RRFS President, and his selling foreclosures direct without the inconvenience of a public auction.

FSR and FSR dba RRFS told the HOA Board falsely that everything about HOA sales had to be kept secret.

How the vulture investors unjustly profited

TRP Fund IV LLC bought four SCA properties at unnoticed sales @ an average price of $52,125, 80% below fair market value. I, and many other Sun City Anthem homeowners, were prevented from attending these sales and bidding because RRFS explicitly withheld notice.

Two sham LLCs, using the property address as the corporate name, bought houses for $6,500 & $7,600.

All 13 houses COMBINED were sold for $734,900 to a few people “in the know”, and not a single one to an SCA owner.

SCA properties RRFS secretly sold in 2014

1/2/14 RRFS sold  2532 Grandville Ave for $25,500 to TRP Fund IV LLC .

SCA did not enforce the 4/27/12 contract indemnification clause that would have shifted this expense to RRFS. TRP FUND IV v. HSBC Bank A-16-735894-C
There is no SCA record that the SCA Board approved the sale of this property.

1/2/14 RRFS sold 2227 Shadow Canyon to TRP Fund IV LLC for $40,000.

Nationstar Mortg., LLC vs. Saticoy Bay LLC Series 2227 Shadow Canyon 133 Nev. Advance Opinion 91, 405 P.3d 641 (Nev. 2017).

There is no SCA record that the SCA Board approved the sale of this property. SCA was not identified AT ALL in the litigation as the HOA under whose statutory authority this sale occurred.

Neither SCA nor RRFS were named parties to the litigation.

There is no SCA record that the SCA Board approved the sale of this property. There is no court record that Red Rock interpleaded the proceeds. Upon information and belief, RRFS did not distribute the proceeds after the sale as mandated by NRS 116.31164(3)(2013).

2/18/14 RRFS sold 2721 Evening Sky for $40,000 to TRP Fund IV LLC

There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. Upon information and belief, RRFS did not distribute the proceeds after the sale as mandated by NRS 116.31164(3)(2013).

2/18/14 RRFS sold 2115 Sandstone Cliffs for $54,000 to TRP Fund IV LLC

TRP Fund IV LLC v. Bank of Mellon et al, A-15-724233-C
SCA did not enforce the 4/27/12 contract indemnification clause that would have shifted this expense to RRFS. There is no court record that RRFS interpleaded the proceeds.

There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. Upon information and belief, RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013).

2/18/14 RRFS sold 2842 Forest Grove for $89,000 to TRP Fund IV LLC

There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. Upon information and belief, RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013).

3/7/14 RRFS sold 2260 Island City for $30,000 to SFR Investment Pool

There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. Upon information and belief, RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013).

3/7/14 RRFS sold 1382 Couperin Dr for $100,100 to LN Management LLC series 1382 Couperin

There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. Upon information and belief, RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013).

3/14/14 RRFS sold 2167 Maple Heights for $6,500 to 2167 Maple Heights Trust

There is no SCA record that the SCA Board approved the sale of this property.
Bank of NY Mellon v. SCA 2:17-cv-02161-APG-PAL, ADR 17-91. SCA did not enforce the 4/27/12 contract indemnification clause that would have shifted this expense to RRFS.

There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. Upon information and belief, RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013).

3/28/14 RRFS sold 2584 Pine Prairie for $7,600 to LN Mgt Series LLC 2584 Pine Prairie.


LN Mgt LLC series 2584 Pine Prairie v. Deutsche Bank A-14-707237-C. SCA did not enforce the 4/27/12 contract indemnification clause that would have shifted this expense to RRFS.


There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. Upon information and belief, RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013).

4/29/14 RRFS sold 2175 Clearwater Lake Dr. for $45,100 to Saticoy Bay LLC 

There is no SCA record that the SCA Board approved the sale of this property. there are no SCA records to ascertain what happened to the proceeds of the sale.

Upon information and belief, RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013).

6/10/14 RRFS scheduled the sale of 2986 Olivia Heights Ave,

The sale was cancelled by a Citi Mortgage temporary restraining order. Citimortgage Inc v. SCA  A-14-702071 NV Supreme court case # 71942.
On 12/7/17, the SCA Board authorized paying $55,000 to Citi to settle the case. SCA did not enforce the 4/27/12 RRFS contract indemnification clause that would have shifted this expense to RRFS.

The Board President’s report of the settlement does not match the court records.

8/15/14 RRFS sold 2763 White Sage Dr. for $63,100 to Thomas Lucas took title as Opportunity Home, LLC.

The sale was conducted without notice. The buyer was a realtor in the BHHS listing office that was under contract with Nona Tobin. Jimijack vs BANA & SCA (A-15-720032-C); Nationstar vs Opportunity Homes (A-16-730078-C), Nona Tobin vs Joel Stokes et al A-19-799890-C, Supreme Court appeals #79295, 82094, 832234 and 82294. SCA did not enforce the 4/27/12 contract indemnification clause that would have shifted this expense to RRFS.

There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013). Instead, more than six years later, after refusing to distribute the proceeds to Nona Tobin, RRFS sued five defendants for interpleader, knowing that no one had a recorded claim except Nona Tobin.

9/11/14 RRFS sold 2921 Hayden Creek Terrace for $100,000 to Jayem Family LP

FNMA v SCA 2:17-cv-1800-JAD-GWF. SCA did not enforce the 4/27/12 contract indemnification clause that would have shifted this expense to RRFS.

There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. Upon information and belief, RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013).


11/12/14 RRFS sold 2416 Idaho Falls for $174,000 to Global Village LLC.

My Global Village LLC v BAC Home Servicing A-15-711883-C . SCA did not enforce the 4/27/12 contract indemnification clause that would have shifted this expense to RRFS.

There is no SCA record that the SCA Board approved the sale of this property. There are no SCA records to ascertain what happened to the proceeds of the sale. Upon information and belief, RRFS did not distribute the proceed of the sale as mandated by NRS 116.31164(3)(2013).



 

Darcy Spears nails it about abusive HOA foreclosures

Click on photo for 4-minute Darcy Spears video. Slide right of bell for sound.

Lucky buyer got a half million dollar house for $30,000…
but he’s getting an even bigger windfall

  • He won’t make a mortgage payment – an HOA sale extinguishes the bank’s right to foreclose according to the Nevada Supreme Court
  • He may not pay property taxes. The bank will probably keep paying them property taxes while the case winds its way through the courts over the next few (or not so few) years
  • He didn’t pay Real Property Transfer Tax (RPTT) on the full market value because the Recorder’s office didn’t notice that he claimed the market value was  $30,000

Nice deal if you can get it

…but just exactly how did that guy, Frank Komorowski from Williamsville New York, even know about the auction.

The homeowner and her real estate agent didn’t know it was going to auction and neither did the potential buyer who had an offer on the table.

The sale was advertised in the Nevada Legal News, but that seems to be a hard way for a guy off the street to find out about how to take advantage of such a spectacular windfall.

Frank is a Super Shopper indeed

I’m not saying Frank Komorowski is a straw buyer, but he’s gotten some really great deals in 2018 besides the one in Darcy’s story:

  • Red Rock Financial sold him a condo in Gowan Cliff Shadows for $5,000 on 2/13/18 at an unknown sale location
  • National Default Servicing sold him a place in Monteverdi HOA  for $30,000
  • Hampton & Hampton gouged him out of $6,541 to buy unit 221, 5751 Hacienda Ave., $0.50 more than the unpaid debt, without even bothering with the pretense of an auction

Who was notified about the sale?

That’s a very good question, and, now my curiosity is piqued. So, to find out, I’m doing a little more public records research.

If random guy can make a killing at these mysterious HOA sales, who’s on the losing end of the deal?

Just about everybody else

  1. It’s not just the homeowner that loses.
  2. Taxpayers subsidized the sale by his shorting the county on the property transfer tax (Frank paid $153 on each $30,000 sale and  instead of the $2,200 that he would have had to pay if he had declared the fair market value.
  3. According to Nevada Realtors Association, the property value of each house in an HOA is diminished 1.7% for each foreclosure, but since there are two HOAs mentioned on the foreclosure deed, it’s not clear which homeowners.
  4. The homeowners in Summerlin West will pick up the tab for all the attorneys fees while the bank sues Frank and the homeowner sues Frank, and the debt collectors will ride off into the sunset with the $30,000 Frank paid less the nine months of assessments plus interest that the HOA gets.
  5. The real estate agent who worked hard on the short sale will be paid zero because the sale was snatched out from under him as well.
  6. The bank loses big (unless it’s a bank that’s contributing to the problem by recording false affidavits on titles (but that’s another story for another time).

That can’t be right!

Well, it’s certainly not morally right for HOAs to allow their agents to engage in abusive debt collection practices.

Doesn’t the law limit collection fees?

Yes. It’s definitely not legal to keep money that’s not yours. NRS 116.31164 says exactly how the proceeds of an HOA sale are to be distributed. The debt collectors just don’t do it.

Keeping all the money (except nine months of assessments to the HOA plus interest) is just about all they distribute because they have been getting away with it.

Moral hazard

No big surprise.

When there is so much money to be made by cutting corners and playing fast and loose with the rules, lots of people who are supposed to be fiduciaries go to the dark side.

What about at SCA?

SCA is no better. SCA has been ripped off by EVERY ONE OF ITS DEBT COLLECTORS, to a greater or lessor degree, since 2014 (that I know of, for sure).

For example, in April, 2015, SCA hired some very crooked attorneys, Alessi & Koenig, LLC, as debt collectors, after SCA dumped Red Rock Financial Services (who was really SCA managing agent FSR in disguise).

A & K filed for chapter 7 bankruptcy in January, 2017, allegedly because A & K was named in over 500 lawsuits out of the 800+ HOA foreclosures they did between 2011-2015, not to mention a $640,000 judgment against them for bid rigging and racketeering in the Melinda Ellis case. (You’re right. They stiffed her.)

When the A & K bankruptcy was dismissed, and the creditors were told to pound salt, it looks like the attorney/debt collectors had kept $2.6 million out of $2.9 million they admitted receiving in HOA sales proceeds.

And there’s a multi-million dollar mansion in David Alessi’s sister’s trust’s name in Malibu (unless he’s picked a new place to hide  assets from creditors).

Retained quite a bit over the legal limit, I’d say.

Next time

More to come about the exciting ways HOA agents make the big bucks for a few lucky winner while the HOA homeowners foot the bill.

If they had only known… Part 3

Owners pay a high price for Board ignorance

Basic ground rules the Board must learn by heart
  1. Association exists to serve the owners.
  2. Board exists to speak for the owners.
  3. Board may hire agents to act on behalf of owners.
  4. Association does not exist to serve the Board or management.
  5. Owners pay even when the Board or SCA agents make mistakes.
  6. Agents, including SCA employees, have no rights superior to owners’ rights.
  7. Rules exist to protect owners.
  8. Board must protect owners.
  9. The Board needs to learn the rules and follow them.

How can NRED training help the Board do right?

  1. Without proper training, the Board is ignorant.
  2. The Clarkson Law Group trained the Board to consult attorneys before ANY decision to the point of letting attorneys decide.
  3. Being ignorant, the Board has failed to protect owners from agents’ actions.
  4. Board needs to learn the rules set up to protect owners and follow them.

The process determines the result

Poor process = poor results

Board failures of the “duty of care”

The costly mistakes described below could have been avoided had the Board taken the training about the proper way to hire experts:

  1. The GM did not sign a management agreement with terms required by NRS 116A.620.
  2. The Clarkson Law Group hired as SCA debt collector without an RFP for  debt collector issued.
  3.  CPAs Ovist & Howard were paid $85,000+ to replace the volunteer Election Committee on the 2017 removal election without legal authority:
  4. HOA Lawyers Group LLC hired as SCA debt collector to replace the defunct and bankrupt Alessi & Koenig LLC
      1. without an RFP,
      2. without a Board-approved contract
      3. without competing with NRS 649 licensed vendors.

Board must learn the rules

Click here for the NRED training all directors should take to know how to prevent SCA being controlled by agents instead of by the elected Board: Hiring Experts and Professionals


Lessons the Board has yet to learn

1. When SCA became “self-managed”, the GM/CAM were hired without of a management agreement.
Not okay.

Absent a management agreement, the GM is an “at-will” employee and has no other rights than those bestowed by the SCA Employee Handbook.

2. RFPs are required for professional services not just construction or maintenance contracts per NRS 116.31086.

2.  The GM wasted $85,000+ for an unknown CPA, Ovist & Howard, to take over the recall election:

  1. without an RFP,
  2. without a Board-approved contract,
  3. without funding to pay for a CPA to do the recall in the adopted budget,
  4. without the Board amending the Election & Voting Manual to strip the Election Committee of its duties, and
  5. after the GM and attorney were both the subjects of active complaints that they were interfering with the independence of the Election Committee
  6. which resulted in diminishing the integrity of the election process.

Guess who benefitted. (P.S. It wasn’t the owners.)

  1. Four of the six Board members who allowed the GM to usurp the Board’s authority benefitted personally from unlawfully hiring a CPA to replace the Election Committee.
  2. Owners’ right to lawfully petition for a removal election was besmirched by the subjects of the petitions who wrongfully blamed the owners who petitioned for their recall for the huge cost of hiring a CPA that was done solely, 100%, by the GM under their watchful, grateful eye.

“For every action, there is an equal and opposite reaction.”   – Newton’s 3rd law

Hiring a CPA wasn’t the only way the GM sashayed in to usurp the authority of the Board, but to really take over, all dissent had to be crushed. These are things a properly trained Board would never have tolerated.

Action
As the liaison to the Election Committee,  I tried to get the GM, President Rex, and the attorney to leave the Election Committee independent and neutral to do their normal job during the recall.

Reaction
I was removed as the Board liaison to the Election Committee by the very people accused of interfering with the Election Committee’s independence.

Action
As a non-conflicted Director (not one signature, not one petition against me), I was one of the three Directors who should have decided

  • how the recall election was to be conducted,
  • whether the Election Manual should be amended for this one election
  • how best to protect the integrity of the election process

Reaction
The GM and the attorney decided to relieve the Election Committee from its duties despite having no legal authority to do so.

Action
I gave the Board notice of my intent to file a complaint of harassment and retaliation for all the actions they had taken against me in retribution for my recommending that the attorney and the GM be fired.

Reaction
The Board took the law into their own hands and kicked me off the Board without notice, process or appeal.

Kinda the same way Putin handled the one serious challenger to his re-election.

3. Restaurant RFP mistakes

  1. GM and one Director met with one competitor to give a leg up prior to RFP.
  2. Board was not informed of GM + director actions until it was a fait accompli.
  3. RFP issued to a hand-picked group of possible bidders
  4. Bids were not opened at a Board meeting.
  5. Bids were not not submitted on the same terms.
  6. After the number of vendors dropped to two, the “operating parameters” were adopted.
  7. Winning bidder who negotiated with GM in advance was allowed to change bid after the other bidder dropped out because the terms had been changed.
  8. No other bids were sought nor considered.

4. Last two debt collectors shouldn’t have been hired without RFPs

Doesn’t it seem like it’s a problem that

  1. HOA Lawyers Group became SCA’s debt collector without issuing an RFP to replace the defunct Alessi & Koenig, LLC?
  2. The Clarkson Law Group became the SCA debt collector without a RFP?
  3. The Clarkson Law Group, hired via the RFP issued to replace the Leach law firm as SCA legal counsel, used its “authority” as the SCA legal counsel to  “rule” that its own selection as the SCA debt collector did not require a separate RFP?

Who cares about debt collection?

We all should. Debt collectors are the source of huge expenses for HOA owners because of the weird way the Nevada courts allow HOA foreclosures to extinguish the bank’s security interest. While you might think this is good for HOAs, it is actually only good for the debt collector.

Remember, abdicating debt collection is:

  • a huge cost to owners
  • a violation of SCA bylaws 3.20 and 3.18(a)
  • foolish
  1. The cost of collection exceeds the amount recovered.
  2. HOA homeowners pay for the debt collectors’ fight with the banks.
  3. The loss of property value to each and every home in a Nevada HOA is, according to the UNLV 2017 study commissioned by the Nevada Association of Realtors, is 1.7% per foreclosure for delinquent dues.

 

 

 

Paying attorneys to disappear political opponents

Lesson 3 – Create a false narrative to win

or as Chuck Lorre, the creator of Big Bang Theory crudely put it in Vanity Card #586:

(Quote redacted)

Item 11 E – Quarterly Litigation Reports

Now that I have your attention, let’s discuss how item 11 E – quarterly litigation reports – is an example of how the Board wastes lots of our money to use the many SCA lawyers to control who sits on the Board. (I’m sorry. It seems I have to offend some people to keep everyone else awake.)

Only one Board candidate seemed to notice problems

In member comments, Board candidate, Gary Lee, pointed out some inadequacies in the reports.

Of the 15 cases reported, 9 are foreclosures. Is there a problem with the way we are handling foreclosures? There are inconsistencies.

Gary did not know what I’ll tell you below. In my case, that the defamatory and false statements were used as the pretext for kicking me off the Board and that the Board has refused my repeated requests to correct “errors” for a year.

Clarkson, SCA legal counsel and debt collector, lies like a rug

Clarkson Law Group has given the same false report for the last five quarters on the case that supposedly disqualified me from the Board.

Wrong!

  • The current status of the quiet title case is not as of 2/1/17. That is the date when the original cross claim was filed, but dismissed on 5/25/17.
  • This ignores that the claims of the Gordon B. Hansen Trust, by Nona Tobin, individual and trustee,  were dismissed by Judge Kishner at a hearing on 5/25/17, and that the order (due in June 2017) was not filed by the SCA attorney until 9/20/17, a month after I was ambushed and kicked off the Board on 8/24/17 .
  • The mere existence of this case is what Clarkson falsely claims disqualified me from serving on the Board. More importantly, what this lie has achieved is keeping my nose out of his debt collection business.

The Lipson law firm’s report is defamatory.

I was not removed from the Board “for cause”.
This is a horrible, hurtful lie.

It brands me “guilty!” without any finding of fact. It is a continuation of the harassment and retaliation I have been subjected to for over a year.

I was unlawfully removed by the other six Board members in a secret meeting based on the totally false and unsubstantiated allegation that I was making a profit from my position on the Board. Poppycock.

The FACTS

  1. SCA was a named party in 2015 by the plaintiff Jimijack, who has possession of the house and been collecting rents on Bruce’s house since 2014.
  2. Nationstar filed a second lawsuit against the buyer at the foreclosure sale of 2763 White Sage Dr. in January, 2016 and completed a failed mediation with  SCA a month before I showed up as the third lawsuit.
  3. On behalf of the Gordon B. Hansen Trust, I entered the case on 2/1/17 as a defendant in intervention on the two existing cases in order to regain the title for the trust.
  4. The 2/1/17 cross claim against SCA was to get SCA to void the defective foreclosure sale from which SCA’s former agents unlawfully kept $60,000 that should have been distributed to either Nationstar or the GBH Trust after paying SCA only $2,701.
  5. On 5/25/17, all claims against SCA were dismissed ($2,701 paid SCA in full in 2014 so SCA has no financial stake in the quiet title dispute), but the Lipson attorney did not file the 5//25/17 order until 9/20/17, a month after I was kicked off the Board on the pretext that the mere existence of this case disqualified me from being on the Board.
  6. I did not, and could not, make a profit from my position on the Board.

And yet, the Lipson report brands me

My request to correct false reports was not heard.

Click here to link to the request I intended to, but did not, bring to the Board.

I stayed silent.

The tone of the meeting and the mood of the crowd made it clear that there was a zero% chance that the Board would see through their prejudices and willful ignorance to treat me fairly.

There was a standing ovation for Jim Coleman who was shaken and outraged at being falsely accused of voting to kick me off the Board by lying, probably racist, Mr. (name redacted) blogger.

There was zero acknowledgement that I existed in the room, let alone was deserving of compassion as the falsely accused (of making a profit off my Board position) and the actually-injured (kicked off the Board without a trial or finding of guilt) victim.

Who cares?

Good question. The issue is way bigger than me.

The precedent puts homeowners in all 3,000 HOAs in Nevada at risk of losing control over who sits on their Boards if who they elect can be “disappeared” without cause, a trial or an appeal on a pretext.

Let’s face it

I was kicked off the Board because the GM and the majority of the Board did not like me telling them they sub-standard in their  implementation of self-management and that they were breaking lots of rules and needed to straighten up or I would tell on them.

So, they made up a story to get rid of me

If it can happen here, it can happen anywhere

All the directors in any HOA would need to do to get rid of a Board member they don’t like would be to deem their position vacant by operation of law.

It’s easy to kill a political opponent if you have attorneys willing to ignore all the other laws that exist to protect homeowners from arbitrary and capricious abrogation of their rights.

This precedent is especially risky for the state because Adam Clarkson is the president-elect of the Community Association Institute and claims that his firm represents 300 HOAs, 10% of those in Nevada.

Good-bye, democracy.

Board meeting as self-serving bully pulpit

Lesson 1 from April 26 BOD meeting

“What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so.”                                             -Mark Twain

Blame the bloggers

At least the first hour of the meeting was dedicated to blaming bloggers for all that is wrong, including the loss of SCA property values. It was a stunning example of how the Board marches lock-step against  owners rights and reflexively resists holding itself and the GM accountable for fixing problems of their own making.

Board beliefs vs. an alternative point of view

Tom Nissen listed his beliefs – all concerns shared by the Board – as his parting gift to the membership.

My beliefs offer another, albeit unwelcome, perspective, to show the way I think the Board and GM could better create value for owners.

Click here to link to the article about the UNLV study on HOA foreclosures referenced above.

Next time, I’ll share with you my planned request to correct the false and defamatory statements in the April SCA litigation reports. I didn’t speak up at the meeting because I was afraid I’d get lynched for complaining.

HOA collection practices cost us all more than you think

What makes our property values go down?

There has been a lot of concern expressed about how having – or not having – a restaurant lowers property values.

There have also been concerns expressed that owners calling for a removal election or complaining about how they were being treated would make this community unattractive to purchasers.

I think those issues, as serious as they are, pale in comparison to the impact HOA collection practices, including SCA’s, have had in suppressing the property values in HOAs statewide.

The Reno Gazette-Journal reported last July that an  academic study provides evidence for this claim.

Click here for the  7/7/17 Reno Gazette-Journal news article that ran under the headline:

HOA foreclosures tied to more than $1B in lost Reno, Vegas home values

In my blog “The house that took over a life“, I wrote about how my late fiance Bruce’s house was snatched by SCA’s former agents and sold for pennies on the dollar.

You might have felt bad for me, but you probably didn’t think that foreclosure, and the other foreclosures that have occurred, lowered your property value as well.

The recent study by UNLV LIED Institute for Real Estate and Nevada Association of Realtors claims it did.

In fact, the study supports the claim that the entire system is flawed, and ALL homeowners pay a price every time their HOA’s debt collector kicks an owner out of their home and then (on the owners’ dime) tries to beat the bank out of their security interest in court.

Survey says:
Homeowners are not happy with HOAs

Part of the research included surveys of Clark and Washoe County residents that I’ll report in another blog, but generally, those surveyed were not pleased with HOAs.

In particular, those academics’ research (Click here for executive summary of report) showed that many Nevada residents (81%) are unhappy with HOAs’ having “super-priority” status to foreclose for delinquent assessments because it hurts them (all the other owners in the HOAs).

One of the study’s conclusions:

“The LIED Institute found that every HOA foreclosure reduces the sale price of every property in the HOA by 1.7%. Thus, LIED inferred that every property, even the ones that have not sold, has suffered this same value reduction. “

           –Analysis of HOA foreclosures in Clark and Washoe counties from 1/1/13-6/30/16 

At least $1 Billion Loss in Clark & Washoe Counties alone

What happened to my late fiance’s house as well as my analysis of public records of multiple foreclosed properties has led me to conclude that this finding,

“…every HOA foreclosure reduces the sale price of every property in the HOA by 1.7%“,

underestimates the impact on ALL homeowners’ property values by a large margin.

But, I’ll share that analysis with you in another blog.

We ALL pay

Those personally victimized by unfair HOA foreclosures are not the only ones damaged financially by them. My detailed review of the study shows there were even more significant financial impacts on ALL HOA homeowners statewide, and from more causes, than those identified in the UNLV/NAR study.

Why do HOA foreclosures lower property values?

The study identifies a few major reasons why HOA foreclosures bring down the values of ALL properties in the HOAs:

  1. Depressed sales price – Properties are sold at HOA sales for a  small fraction of the property’s fair market value (FMV). Since the buyer pays pennies on the dollar of what it is worth, ALL community property values go down.
    Study says: Every home in an HOA loses 1.7% when the HOA forecloses.
  2. Banks charge more for loans in HOAs to cover the risk of loss if the HOA forecloses. HOAs’ super-priority extinguishes the bank’s security interest (mortgage) and the study estimated how much banks have lost after  the banks’ loans were cancelled.
    Study says: Banks lose 100% of the loan balance on every property sold at an HOA sale, and Federal and Nevada courts disagree about how to handle this.
  3. Corruption within HOAs, particularly when management agents have a financial connection with the debt collection agent as was happening at SCA until 2015 when FSR, our managing agent, was financially intertwined with, and was the license-holder for SCA debt collector, Red Rock Financial Services
    Study says:

“…80% of respondents would support a law prohibiting HOA management companies from also owning and operating their own HOA collection agencies.” 

So what?

This series of blogs is intended to put SCA’s collection practices within a much larger context so you can see how we are all affected.

  • SCA is just one of over 2,500 HOAs in Nevada in the LIED database.
  • Nevada is just one of 22 states that have huge problems with HOA agents, using the HOA’s power to foreclose, such that

1) both the homeowner and the bank lose 100% of their property, 2) the HOA gets very little they are owed, and
3) the debt collector gets very, very rich, frequently by taking more money under the table than the law allows them to charge.

  • My late fiance’s house is just one little house, but it is a stark example of what happened many thousands of times in the wake of the 2008 economic collapse.
The foreclosure system is broken and needs to be fixed

Whenever you have economic turmoil and large reversals of fortune, you have a breeding ground for corruption. I want to show you how the limitations in the legal and judicial system have allowed some unscrupulous individuals (and institutions) to wildly profit at your expense and mine.

Did SCA Board members profit at owners’ expense?

No. Certainly not me.
I did not, and will not, profit from exposing any of this.

No other SCA Director profited from any of this either.

As you peruse these next few blogs about how SCA collection practices affect your personal bottom line, please note:

  1. I did not ever place a matter before the SCA Board from which I made, or could have made, any profit. No matter what action the SCA Board takes, or doesn’t take, related to collections or foreclosures has any impact on the quiet title decision of Judge Kishner, Nevada 8th district Court.
  2. I don’t believe any current or former SCA Board member personally profited from the foreclosure of any SCA property.
  3. I believe SCA Board members have simply trusted and followed the advice of SCA’s agents without suspecting that the agents had set the process up to unjustly enrich themselves.
  4. I don’t believe anyone on the current SCA Board understands that the SCA Board has legal alternatives for handling collections that could prevent many of the downsides using self-serving debt collectors who unfairly profit from foreclosures and the huge volume of litigation that ensues.
  5. However, I believe the current SCA Board is culpable for REFUSING to even examine flaws in SCA’s collection system or to consider more humane options which would benefit ALL SCA homeowners financially more than SCA’s agents benefit.

HOA Boards and homeowners have frequently been victimized by their agents (managers, debt collectors and attorneys) who can take advantage of their ignorance or inattention.

The HOA Board must ensure all assessments are collected. That’s a given.

But, in general, volunteer boards do not have the expertise to select the most cost-effective and humane method for doing so.

Our SCA Board has been duped by all three (or four or five) debt collectors SCA has used. They have all unjustly profited by conducting foreclosures without following the statutes, by retaining proceeds from the sales that they were not legally entitled to, and/or by tricking the Board into believing that their costly methods were the only legal option.

Our cost when agents serve themselves

It’s tragic how easy it is for HOA agents who play fast and loose with the law to unjustly enrich themselves. Lax enforcement of the laws on the books, such as they are, is ineffective to stop their fingers from reaching into our pockets.

Statewide, a much stronger regulatory system is needed to prevent such institutionalized corruption from getting a stronghold, and to protect HOAs and homeowners from getting ripped off.

Why would a debt-collecting agent derail his gravy train?

Telling the SCA Board that there are more cost-effective options to successfully collect assessments than using the SCA association legal counsel as the debt collector would drastic reduce The Clarkson Law Group’s big, fat bottom line.

Agents are supposed to act solely and exclusively for the benefit of association membership, but the temptations for a quick buck are just too great!

It’s much more lucrative to keep the Board in the dark about how much the costs of collection exceed the amounts collected.

Or better yet, the attorney/debt collector can bully the HOA Board into believing he is the final authority and that the lucrative (for attorneys) litigious process is only legal option available.

Sound familiar, Mr. Clarkson?

 

 

 

 

 

 

 

How SCA agents need to be exposed like Harvey Weinstein was

And not how he exposed himself…

Last night during the Oscars, the comment,

“If you can’t trust your agents, who can you trust?”

got a big laugh. Everyone knew that powerful Harvey Weinstein was brought down after decades of abusing his power broker position, as in:

“You’ll never work in this town again!”

Such threats, spoken or not, had long been sufficient to keep his “casting couch” an open secret.

And to keep those who were being hurt from being heard.

Same agent, different result

But uncomfortable laughter also came from many who knew that agents abuse clients in other subtler ways, such as by not protecting all their clients equally well thereby enabling a discriminatory system to endure and making big bucks while doing it.

Kevin Spacey was disappeared from the shooting of “All the money in the World” after being accused of sexual assault by some young men he was supposed to be mentoring. Scenes were reshot to put Christopher Plummer in to replace Spacey as the lead actor. Mark Wahlberg and Michelle Williams went back to work to do their parts again, but they were far from treated equally. A vast difference in compensation was negotiated by the same agency both of the two actors:

Mark Wahlberg paid $1.5M for film reshoot that earned Michelle Williams $1,000.

Wow. That seems so obviously not okay now, but it the not-too-distant past, it might have passed by unnoticed.  At least, for now, #MeToo and #TimesUp have created a cultural shift. The pendulum has swung to a point where such a disparity is worthy of comment.

Let’s hope SCA is able to move to such an awakening in my lifetime, and homeowners don’t have to face abuse at the hands of SCA’s agents.

Am I saying that some of SCA’s agents have been abusive?

Yes, actually I am saying that. And I’m saying it needs to stop now. Time’s up.

And I’m also saying that the current SCA Board, the current SCA legal counsel/debt collector and the current General Manager need to stop protecting themselves and each other.

Their job is to protect us. Homeowners should not have to spend one thin dime to be protected from them.

Why I am speaking up

Many Hollywood women came forward to expose Harvey Weinstein after one spoke up. I hope my story will resonate with homeowners, not just in Sun City Anthem, but also with homeowners in HOAs throughout Nevada and will inspire others to not be silent.

Bottom line:
SCA agents have had their hands in our pockets.

SCA’s former agents, without any of the prior Boards feeling a thing,  slipped a house or two that didn’t belong to them into their pants pocket, and one of them was mine.
Note: I’m not saying anything bad about prior SCA Board members. Not a single one ever took a dime. I’m sure of it.  And I don’t think they were negligent. There was so much chaos after the real estate market collapsed in 2008, no one knew the difference. I certainly wouldn’t have known or cared had not one of those stolen houses been directly under my care. 

Who cares now? 

When SCA replaced Red Rock in mid-2015, SCA went from the frying pan into the fire by hiring attorneys, Alessi & Koenig, to be our debt collectors. Then when I showed the Board and GM how bad these guys were, they did the unthinkable and made it worse by hiring a new debt collector to also be SCA’s corporate counsel instead of re-thinking the whole process.

OMG! David Alessi wasn’t licensed as an attorney in Nevada, was named in litigation by 500 of the 800 HOA foreclosures A&K did from 2011 to 2015 when SCA hired them. By 2016, they had morphed into another sham corporation, HOA Lawyers Group, before SCA finally let them go.

And still, SCA managed to get strapped into even a worse deal by contracting with the Clarkson Law Group to be both the debt collectors and corporate counsel.

In a stunning opening act of abusive overreach, Clarkson protected his business interests as well as those of SCA’s former agents by ordering me to recuse myself as a new Board member from ALL SCA collection matters.

Then, to protect the GM, he restricted my access to any SCA records and continues blocking access to GM compensation data to this day. He protected the Board majority from recall and caused the members to pay $85,000 for a CPA to bungle it.

Next, he used his corporate counsel magic powers to create a technical sleight of hand to knock me off the Board on false charges without a trial.

I’m the only attorney in this room. We’re in charge here. Shut up and get out.

How HOA foreclosures take money from all our pockets will be the next topic

A recent study showed that every home in that HOA loses an average of 1.7% of its value when there is a foreclosure by that HOA.

Next time I’ll break it down for you. I think you’ll see why Adam Clarkson, SCA’s current debt collector/legal counsel, is going to such extremes to try to silence me.