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$1.2 million mansion for $10K?

By Jay MacDonald · Bankrate.com
Monday, July 4, 2011
Posted: 9 am ET

Here in Florida, the Foreclosure State, we thought we'd already cataloged every genus responsible for this plague on all our houses, from the predatory lenders to the oblivious robosigners and rocket dockets to the no-mod-for-you bank Nazis. That was, until we caught wind of the HOA chasers.

The St. Petersburg Times recently profiled an opportunistic little industry that discovered a loophole in the state's foreclosure laws and is milking it for all it's worth.

Florida law allows homeowners associations, or HOAs, to foreclose on properties when dues are in arrears and does not require the HOA to notify the primary mortgage lender. Florida has 40,000 homeowner and condo associations, many struggling to keep basic services going with so many owners behind in dues. The HOA's lawyers encourage them to foreclose because, if the bank beats them to it, they usually won't see a cent.

Here's where opportunity creeps in: Since most homeowners owe less than $15,000 in association dues, the HOAs can file their foreclosure cases in county court rather than in circuit court, where caseloads are backed up. This allows the associations to get final judgment on a foreclosure in as few as 270 days verses the 617 days it now takes for the average bank foreclosure.

Yes, a mortgage lender would gladly pay the back dues to protect their investment -- if they knew about it. But because the HOA doesn't have to notify the bank of its foreclosure actions, it could be months or even years before the primary lender forecloses.

Enter HOA chasers like Barry Haught and his associates. They acquire HOA foreclosures in private for pocket change, since they only have to pay off the delinquent HOA dues, not satisfy the mortgage. They then rent the property, and sometimes live there, for the months and even years it takes for the bank to foreclose.

This loophole has allowed Haught and his associates to acquire 71 properties in Tampa's Hillsborough County worth $8.2 million for a little more than $220,000. Among his deals: a $1.2 million home on Tampa Bay for $10,010; a 3,700-square-foot home for $8,090; and dozens of single-family homes for $4,000 apiece.

And no, they are under no obligation to inform their renters that the primary lender could unceremoniously kick them to the curb one day.

Did I mention that this is all perfectly legal?

We're kind of used to this stuff in the Foreclosure State, where the unofficial state motto is: Only in Florida!

But I'm wondering if this HOA play happens elsewhere?

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166 Comments
robert
August 17, 2011 at 8:27 pm

Simply, Barry Haught should be hanged. But no, the US justice system will let him walk free.

MattGMD
August 17, 2011 at 12:52 pm

Yes, Haught and two if not three of his partners in this scheme have been convicted of various criminal activity. Good thing they found an attorney who happens to also do legal work for a couple hundred HOAs.

Our Florida governor, Tricky Rick Scott hired a corp criminal defense attorney as his top aide. The same defense attorney who worked out the deal so that his hospital company HCA would plead guilty, pay $1.7Billion in fines for Medicare fraud and allow Scott to resign and remain unindicted. If corporations are people, then other than paying fines to keep the president of the corp out of jail, they can't arrest a corporation. I bet Bernie Madoff wishes he had thought to hire a defense attorney as his top aide. The Godfather had an attorney at his side and he was never indicted either. A quality consigliere paid for by tax dollars - brilliant!

Terry R Hebert
August 17, 2011 at 11:23 am

Sounds like a leagle thief at work,I have heard of it years ago in San Clemente but I had prayed it was not real.Looks like we all have to grow up and read the fine print.Good luck and God Bless .

Sean Lukens
August 16, 2011 at 9:11 pm

It's confirmed. This country officially sucks.

Joe
August 13, 2011 at 11:41 am
J.B. Robert
August 13, 2011 at 9:47 am

It sseems to me that all a bank has to do is download all the HOA foreclosure actions in County Court and compare it against a database of their open mortgages. Better yet, some enterprising individual could obtain a listing of all open mortgages in the county and bounce the HOA foreclosure list against it (electronically). Then notify whichever bank holds the mortgage in exchange for a small "finders fee". Probably make a nice living for yourself for the next year or so.

mike phaup, richmondm, va
August 09, 2011 at 1:10 pm

let them eat cake sil vous plait mon ami!

Oscar Barriuso
August 02, 2011 at 2:24 pm

In an amended criminal docket obtained by ABCNews.com, Barry Haught previously served 42 months for conspiracy to defraud the United States and was ordered to pay more than $14 million in restitution. Haught was charged with Medicare and Medicaid fraud for billing the government for medical equipment sold in poor neighborhoods.

Oscar Barriuso
August 02, 2011 at 2:12 pm

THIS GUY IS A CON ARTIST !!! BEEN ARRESTED MANY TIMES ! SCUM BUCKET

http://florida.arrests.org/Arrests/Barry_Haught_5529772/

Saywha
July 31, 2011 at 4:07 pm

Who is JOHN WAYNE and why is he in Texas?