Latest / The Jon Sanchez Show / How An HOA Can Foreclose On Your Home
Transcript
- Jon G. Sanchez: Welcome back to the John Sanchez Show on News Talk 780 KOH with Aaron Clark of Edriad, and of course, Dwight Millard of OnQ Home Loans. right. again, a bit of a of a challenging session today. Here's ⁓ here's how we finished up. And I'll give you the reasons behind it. ⁓ Then, of we're gonna move into our topic, continue our discussion that Aaron and I started on Tuesday. ⁓ How an can foreclose on your home even if your mortgage is current. All right, so damage specifically was on the Dow side of things. We lost 464 points on the Dow 0.85%. So nothing major in the big scheme of things. 53,885 was our closing level. The NASDAQ gave up just 15 points and the SP lower by 14. So you see it was very much concentrated on the the Dow side of things. On commodity side, so here was the issue. It was oil. And once again, this is one of those days where didn't matter if you had good earnings or not, if you were in the ⁓ the memory sector, ⁓ the Sandus, the Western Digital, so on and so forth, most of those got hit hard. And that's what hit the NASDAQ, which again, surprising the NASDAQ just dropped a fraction as it did. Well let's talk the oil situation. remember it was earlier in the week when the president, or excuse me, when Treasury Secretary Scott Bescent said, ⁓ hey, I think it was Monday, hey, ⁓ we're we're gonna have a deal with Iran either today or tomorrow, meaning Monday or Tuesday. ⁓ Thought, well, that's a pretty bold statement. And Iran came out and said, we're not to them. So then the the don't laugh so Aaron. So then the ⁓ then the conversations be ⁓ I know, so the conversations began to shift. Aaron Clark, Edge Realty: I can't help it. Jon G. Sanchez: Where Iran coming out and saying, we're not talking to the U.S., but us on Oman, we're starting to, you know, rap a little bit and sitting down and trying to work out a deal. Well, the shifted in the market and with oil prices, which again shot up $2.9, $77.27 a barrel. ⁓ Tone later this when reports began surface that Houthie, the forces there in Houthie, or of the Houthie forces, had attacked a Saudia flagged tanker in the Red Sea. That sent oil prices immediately through the roof. Reuters then reported that a draft version of the proposed, now listen closely to what I'm about to tell you, because this could affect your portfolio. Reuters then reported that a draft version of the proposed Iran agreement, which is expected to be voted on by Iran's parliament, ready for this, guys? Would prohibit. Okay, so so the deal sitting to the Iran Parliament. Okay. The deal would prohibit US and Israeli linked votes. Aaron Clark, Edge Realty: Yeah. Jon G. Sanchez: vessels transiting the Strait of Hormuz. ⁓ this whole thing, it was like, no, not gonna allow your ships going through here. So how far do we think that one's gonna get, right? so again, what shot up oil price is ⁓ and then is history as the saying goes. So yeah, it's it's just just nuts. You y ⁓ I hate to laugh. a very obviously very serious situation, but my gosh, what a mess. Aaron Clark, Edge Realty: ⁓ huh. Jon G. Sanchez: What a mess. All right. Some of the big movers, Sandis today down $91.92, 6.81% loss. came under pressure again, no specific reason. Western Digital down 13%. Both again did pr pretty well earlier and then ⁓ had great earnings reports, but did recover from the ⁓ the worst levels of the day. But again, they had great earnings reports, just one of those days of the semis. ⁓ AMD had a day up seven dollars and twenty three cents, one and a half percent, forty-nine twenty-nine. You get the picture as you know, just same old thing. It's like One those bad days of semis and just kind of brings everybody down. And then we have the oil situation. right, my lord, let's get over to your side. ⁓ I told you oil up two dollars and nine cents. Let's go to gold, four dollar and fifty cent loss, very quiet, four forty-three hundred and fifty dollar close there per ounce. But Dwight, Dwight, five basis point increase on the ten year treasury, four sixty-seven. I'm afraid to ask you what the thirty year did. Dwight Millard: Thanks. Yeah. Yeah, I don't think this is gonna shock anybody, John, but you're at six point seven seven on a 30 year according to mortgage news day. Yeah, I I mean, but what's even what's even crazier is if you look at their the you know the survey, the the arm is at six only is at six point three four. So you're gonna go into an adjustable at six point three versus you know, I mean you're talking 40 basis points. Jon G. Sanchez: Ooh. Six point seven seven. Yeah. Dwight Millard: for a thirty year fix. So I that's why arms aren't doing anything. You know, it's just your governments are still in the know, mid six point threes, you know. So I mean it's we're I just don't know. I mean you got the unemployment numbers coming out tomorrow. John, do you see anything that would you think anything would move Jon G. Sanchez: Yeah. What did I guess say? No, ⁓ the w I think we're fine on the on the on the non-forum payroll data Dwight. ⁓ street anticipation is about ninety-three thousand job creation. I if we come in around we'll call it, you know, somewhere around a hundred, you know, give or take twenty thousand on either side. I think the street's gonna be fine with. I don't think you're gonna see any major reaction. We had the ⁓ of course it's Thursday, so we had the initial claims ⁓ numbers today on the you the state unemployment benefit and broke the the two hundred thousand mark on initial claims, up one thousand filings for the week to a hundred and ninety nine thousand. So that was good. ⁓ claims were only up twenty four thousand to one point eight million people. So remarkably jobs picture is very strong. So I don't I don't expect anything surprising ⁓ tomorrow. Dwight Millard: Who but John, what if they what if they what if they miss big time? I mean, what if it's low? Do you think that would be Jon G. Sanchez: ⁓ yeah. Yeah. If it's low then then then could be an issue. It it could well it could be I could make an argument, Dwight, whether they're low or whether they're high. Yeah, because you can then you start playing is the glass half full or is the glass half empty, right? If numbers if it's a strong number, then the the the bears are gonna come out and go, look at too many people going back to work. That's gonna create inflation. Hey, next move of the Fed's gonna be an interest rate increase. If the numbers are too low, ⁓ the economy's beginning to soften. Dwight Millard: Either way. Jon G. Sanchez: All these worries about AI. And then you you bring out all the negativity that you can find in any type of market condition that we find ourselves in. then and then they start selling off for that. So that's what I'm saying. You want ⁓ you know, the term that you and I like to use Dwight when we talk non-farm numbers, ⁓ the Goldilocks, right? We don't want it too hot, we don't want it too cold, ⁓ we other things we need to worry about, we don't need to worry about the labor side, right? Dwight Millard: Thank you. Yeah, no, that I I I you know, I think everything I see i is looking right around like you said at eighty to a hundred thousand mark. I think that would be like you said, that that's the middle of the road. you know, I I think they've kind of backed off this you know, at least a little bit for this rate increase though, haven't they? Feels like it anyhow. Jon G. Sanchez: It's well, that's an interesting point. I was gonna actually bring something like that up, so thank you for doing that. The the there was a great article today, I think it was in Wall Street Journal, Kevin Wars, the new Federal Reserve Chairman, is purposely being very tight lipped and quiet about everything at this point. The street's having a very hard time figuring out what the Fed's next move is gonna be. We're not getting any hints. And and remember he warned us that I think his first ⁓ his first meeting, interest rate decision, and then the press conference of his tenure. that he was gonna he was gonna communicate differently. It wasn't gonna be kind of this, hey, this is what we're all thinking and so on and so forth, much more tight lipped and and so the streets very, you know, very confused right now trying to figure out the Fed's next move. I think if we put a you know consensus of of analysts into a room right now, I think the the the majority would say the next move in September is gonna be an interest rate increase. But obviously the Fed says, we're data dependent. You just never know what we're gonna do. ⁓ Erin Dwight Millard: Mm-hmm. Well strangely enough, John, strangely enough, when when when they lower rates, rates go up, when they raise rates, maybe they'll Aaron Clark, Edge Realty: Yeah. Jon G. Sanchez: I know. Welcome to our the crazy world, that's for sure. Aaron, any comments you on the ⁓ labor front before ⁓ hit a break? Aaron Clark, Edge Realty: I mean it's everything's kind of floating right where we're expecting. So as long as there's no crazy moves, I mean, I think we're still gonna be just bouncing along this line, you know. Little ups, little downs and pretty much straightforward. Jon G. Sanchez: Yeah, yeah. Yeah. Pretty much straightforward. it real quick, how y give us your ⁓ your take right now on local real estate traffic and attitudes, that type of thing. Aaron Clark, Edge Realty: I mean, unchanged. I mean, we're not really seeing any major pullback or push forward or anything like that. Everything's just kind of maintaining status quo it where it where it has been for the last couple of years this time of year. The seasonality of it is still in full effect. But, you know, be careful out there. Price stuff the w where it should be. Stop overpricing things. And we always talk about I mean, we could get into it more later, but you know, we we're working within three different markets. You have your entry level, then you have your move up level, and then you have your high end. Jon G. Sanchez: Yeah. Yeah. It'll go. Aaron Clark, Edge Realty: High end is moving great, low end is moving crazy, that middle is sort of the the area that's a little bit slow right now. Jon G. Sanchez: Hmm. Okay. All right. Yeah. More sensitive. Do you wish you were a realtor in Southern California or Northern California right now with the the SpaceX lockup of nine hundred and ⁓ four million shares now becoming available to all those employees who are just gobbling up real estate regardless of price because they just have a newfound wealth? Aaron Clark, Edge Realty: I love Nevada, so there's nothing that could take me to California. I don't mind visiting, but I'm not living there or working there. ⁓ love this place. Born and raised. ⁓ Jon G. Sanchez: Ha ha ha. I don't know. So those stories Yeah, yeah, exactly. Yeah, that's for sure. That's for sure. Yep, that's it. Amen. Amen. right, we come back. Let's get into ⁓ we're gonna we're gonna pick on Dwight first because this H O A MS. Wait till you find out folks or listen to what he says he has to go through before approving a loan. Aaron Clark, Edge Realty: Hm. Jon G. Sanchez: ⁓ with a home that's in an HOA, a condo in a condo association, et cetera. And then we're gonna get into ⁓ again some of the things you need to do to protect yourself. It's gonna be fascinating. Don't miss it. Welcome back to the John Sancho Show and New Stock 780KOIT with Dwight Millard of Un Q Home Loans, Aaron Clark of Adrility. All right, once again to ⁓ wrap you up on the market and then we'll get back to the real estate. 464 decline on the Dow. Now Zach lost 15 in the SOP, lower by 14. right, HOAs. How can they foreclose on your home even if your mortgage is current? So once again, if you just join us, ⁓ and I started this topic, ⁓ just kind of scratched the surface on it last last Tuesday. And we so we we absolutely wanted to ⁓ to pick up on this and really bring you up to date. ⁓ Dwight, before we ⁓ we we get back to our our formalized you know ⁓ discussion, we're gonna bring in the conversation since you weren't here on Tuesday. And I want you to explain to the audience what goes on behind the scenes from you as the lender's perspective, in regards to HOAs and then how they're looked at by the lender. I mean, 'cause this can be a major issue. Dwight Millard: Well i so John, yeah, they're a pain in the you know what. you know, they're the the the the the big difference, John, is that know, a an attached PUD, which we call townhomes, which is not a legal term, is different animal than a true condo with a long legal description. But I over the years what has happened is these condos associations have gotten in trouble, lots of trouble. So, you know, they're already trying to get themselves out of out of the out of ⁓ despair and things like that and you know special assessments I think you guys talked about. But when it comes to financing, anytime you do government, government it has to be approved. So on a VA or an FHA on government loans, you it has to be on the approval list. If it's not on the approval list, and they have to yeah, and they have to apply and they have to maintain records, all of exciting things. Jon G. Sanchez: Mm-hmm. Meaning the association has to be on the approval list. Dwight Millard: So there's a lot of I there's a lot of ⁓ condo opportunities out there that are not eligible for government financing, VA and FHA. So minimum down and no down. Jon G. Sanchez: Okay, but but let's go to the home, the the housing track out there, which you know, Aaron looked it up. What would you say, Aaron? Seventy percent or so of housing tracks here in northern Nevada or HOA, you know, managed or whatever. What what's what's yeah. Aaron Clark, Edge Realty: Yep, have some sort of HOA attached to them, yep. Dwight Millard: So if you if so if you're dealing with the so when you get into an hoa on a single family resident non non condo, there's not a whole lot there we look at. you know, we're gonna look at the legals that ⁓ the company has, which is far different than if you were buying an actual condo with an ⁓ HOA attached to condo unit. So when you go that and John, the big, the big, big breaking news as is as of August third, which is what, Monday? Jon G. Sanchez: Mm-hmm. Dwight Millard: ⁓ Fanny and Freddie used to have what we call the limited review on condominium ⁓ Everything now is a full review. So it it's a two-week delay. It digs into financials, it digs into everything, John. So it's a ⁓ HOAs are are are they're very nasty. And and here's the other problem. If we need anything from the HOAs, typically, and I know we have HOA companies out there listening to the show. ⁓ Jon G. Sanchez: Even gonna be tougher. Dwight Millard: But if they're if we need something from them, especially an occupancy, you know, what the occupancy rate is, we don't get it. They won't get it to us. So we have to go old school, we gotta see who bought it, where do they live, you know, we gotta cross reference. So it takes some time. So ⁓ HOAs are are are are problematic, ⁓ they're everywhere now, right? Because they're they have a function to maintain grounds and, you know, do different things, ⁓ especially inside of a PUD. ⁓ Jon G. Sanchez: Mm-hmm. Yeah. Yes. Right. Dwight Millard: Which again is way different than a condo project HOA. Planned unit development, which, you know, a lot of times in the HOA it covers landscaping, you know, maintenance of gates, garages, not garages, but landscaping, things like that. So they can be very detailed and very, very expensive. Yeah, very expensive can get up there, John. And that's the people get in. We talk about how to afford a ha a house a couple of weeks you know, we one of the things that Jon G. Sanchez: Explain a w ex explain what a PhD is? Yeah. Community centers, et cetera. Aaron Clark, Edge Realty: Yeah, pool, gym, all that stuff. Dwight Millard: people kind of forget is you look at the P I T I, which is usually separate from the HOA. I don't collect HOA fees on their payment. They it's a separate charge. if you got a four hundred and fifty dollar HOA fee and you're struggling, you know, it's not uncommon that you're three or four months behind. Jon G. Sanchez: Okay. Aaron, let's get back to you real quickly. Thanks, Dwight. you as the reloader, what what would what do you need to advise your client on when they're looking at a at a at a home in an HOA community? What are some of the things that need to be considered as as the purchase, obviously, and so on and so forth? Aaron Clark, Edge Realty: Well, I mean, when it comes to an HOA, usually it's more logistic as opposed to just what the cost is. You know, the cost is published. We can see what the expected fees are and things like that. So it's more logistics. If you're gonna like I have a client right now, they just sent me a a text last night. It was like eleven o'clock at night. He's like, I just got my fourth letter this week for leaving my carb my garbage can out. I'm done. I'm ⁓ Jon G. Sanchez: Yeah. Aaron Clark, Edge Realty: Done. I want to move, like whatever. He was just really, really upset. I told him I said, Hey, listen, just sleep on it. If you're serious, we'll talk numbers tomorrow. But, you know, it y I knew he was really upset. Anyways, the point is the logistics of it, if if you're somebody who likes to tinker, work in your yard, do whatever, mean, you might not want to be in a really strict H Way because they have rules like you can't leave your garage door open ⁓ more than an hour, or you w ⁓ your garbage is dumped, you have to bring it. Jon G. Sanchez: There you go. Yeah, yeah. Yep. Aaron Clark, Edge Realty: back up to the curb within a certain amount of time period. The color that you paint, the number of cars parked in your driveway. a lot of people, especially in Nevada, we got a lot of people here that like to go camping and have RVs and trailers and things like that. And they think they don't think about it. They may buy the house because it's their first house and then they go and decide to go buy a little trailer or something like that and they're gonna park it in their driveway. Nope, not allowed. So you gotta be careful of all these things. Yeah. Jon G. Sanchez: Yes. Mm-hmm. Hmm. Nope. Then then they gotta go get the storage, which is an additional cost. Yeah, I've heard those complaints. Aaron Clark, Edge Realty: And now you're paying all this extra fee. And then and then on top of it, you have to realize that HOA fees change and they don't go down. They've they will never go down. They go up. And so if you're very tight on budget light to Dwight's point, when they're calculating everything, they're calculating everything from the perspective of today's numbers. If those fees go up and there's an issue, like I said, we use the example ⁓ Tuesday of Somerset with the rock wall assessment. Dwight Millard: Yeah, it Mm-hmm. Yeah. Aaron Clark, Edge Realty: So all all those rock retaining walls that are failing and they need to fix. All of those fees are getting passed on to the homeowners in that entire community. That's a massive increase in cost that people did not expect and they have to find that money to pay for it. Jon G. Sanchez: That's the special assessment. Dwight Millard: Yeah, see, and John, I think I think in these new developments, correct me if I'm wrong, Aaron, but in these new developments, think it's almost mandatory now that these builders have to put HOAs in place for the for that upkeep. Is it not I I mean like it seems like every development now has an HOA, one way or the other. Yeah. Yeah. Jon G. Sanchez: Mm-hmm. Yeah, everywhere. Aaron Clark, Edge Realty: Yeah, they're all I mean, they're all doing it now because of the convenience of being able to pass on that the maintenance to the subdivision. Jon G. Sanchez: Real quickly before we go to break, I want to squeeze this in ⁓ because we're gonna come back and and discuss how you protect yourself. so either one of you wanna answer this one. What do we need to look at, guys? as as let's turn table. I, as a buyer, I want to look at the reserve balance that the HOA has. I want to look and see the history of the association increases. You know, ⁓ is it happening a year? Or how often? What kind percentages? But focus real quickly, again, neither one of you or one of you on the the reserve fund because that's where back to both of your points, that's where you can really get yourself in trouble as a new buyer. Dwight Millard: Well, John, real quick, it it's mandated by the state, you know, and they oversee it. And i you're you're absolutely correct. When we do a an HOA and we gotta get into it, we look at the budget, we look at the reserve studies, the insurance policy, litigation history, all of those things matter. And I think it's public record, right, Aaron? And and and I think, you know, you've got especially ask for the HO. You gotta know who's in it, you know, because usually there's always person in an HOA environment. Jon G. Sanchez: Yes. Yes, it is. Dwight Millard: you know, that ⁓ rides around in their bike and, you know, keeps tabs on everybody. Yeah. So. Jon G. Sanchez: Mm. Mm-hmm. Yeah. Yeah. Yep. that's it's very true. ⁓ So line, do your due diligence. Don't just focus as you're so excited by your house. Don't just focus on ⁓ okay, yeah, I can afford the two fifty a month. You gotta dig deeper because there could be some Aaron Clark, Edge Realty: We call them a Karen. Yes. Dwight Millard: Yes, yes. Aaron Clark, Edge Realty: And we know we know which ones to be careful of. We don't have to research anything, we know. Dwight Millard: Yeah. Jon G. Sanchez: Yeah, yeah. Yeah, yeah, they definitely. All right, we come back. We're gonna talk about to to wrap it up, how to protect yourself ⁓ with these HOAs that again can file the lien. Before you know it, that house can be gone. You may be going, What the heck? left my trash can out and I forgot to pay that, you know, five hundred dollar assessment that just hit and you forgot about it. Now there's a lien and boom, here you go. It's stories all have, it's crazy. ⁓ Welcome back to the John Sanchez show on New Stock Seven Eighty K O Dwight Millard of Un Q Home Loans and Aaron Clark of Edge Reality. Aaron, let's get your phone number going for sir. Aaron Clark, Edge Realty: six seven three sixty seven hundred. Jon G. Sanchez: Thank you, thank you, mister Millard. Dwight Millard: Yes, sir, two hundred four zero two zero two two. Jon G. Sanchez: Thank you, fellas. Do appreciate it. a ⁓ quick reminder, don't forget I want you to join me for my next educational estate planning webinar ⁓ Wednesday, August the 12th at 6 p.m. Trust the step most families miss. You don't want to miss this one. ⁓ Just to my website, specialized trust.com, right on the homepage. Sign up. Real simple. 6 p.m. next Wednesday, August the 12th. Okay, boys, ⁓ begin to wrap things up here on our very topic. again, how a house can or Yeah, house. I was gonna say real estate could be foreclosed upon by HOA. I give me a a less than a minute answer on this one. Please, from a lender's perspective, I already asked Aaron this one last week, how is an HOA when it comes to foreclosing on your home? Dwight Millard: extremely powerful. They have as much rights as a bank, you So we have that's why every almost every lender, John, has an actual in house ⁓ HOA you know, condo or HOA. It's the same thing. They they do ⁓ they scrub, scrub because they they just don't want to get that bounce back, you know, for some HOA problem. So ⁓ yeah, they're a serious problem, John. Can be. Jon G. Sanchez: Aaron, repeat yourself what you said on Tuesday, not last week. as far as the pecking order of Aaron Clark, Edge Realty: Yeah, HOAs have super priority. So they ⁓ supersede even the the lender. I mean, we had during the foreclosure crisis of two thousand eight, the HOA companies were foreclosing on these properties left and right. You didn't pay your mortgage, but you stayed in your house for two years, but you didn't pay that HOA. They were coming down on it hard. So there was a lot of foreclosures that were HOA only. Jon G. Sanchez: Didn't you say on Tuesday they they even supersede the IRS? Aaron Clark, Edge Realty: Yeah. I'm not an attorney, so consult an attorney, but yeah, yeah, that's that's what we've seen. Yeah. Jon G. Sanchez: So they're they're at the top of the chain. Yeah. Yeah, exactly. Yep. Yeah, that's for sure. Aaron, you're gonna wrap us up on this one. Dwight, chime in. How do we protect ourselves, Aaron? Dwight Millard: That was a hard one to believe, John, but I I'll I'll I believe Aaron. I IRS is relentless, but yeah. Aaron Clark, Edge Realty: You have to read the documents and look not just only at the the documents showing the budget, but see what kind of repairs or anything like that have been done or litigation. Those are two key frame things because one, you have to disclose those things. It'll s it within the litigation documents, it'll specifically reference the house ⁓ ⁓ a condo, the specific condos, any issues that there were. Because even though you may not be able to get funding or get a loan on something like that. We were talking about this earlier. You might find out that you're lumped into a sum of a a litigation, but your property had a hose bib replaced and that was it, you know. So look into the details of everything specifically on that. Dwight Millard: And John, you know, to add to Eric, you're gonna get a stack that's that big. You know, you're gonna that's what you're gonna get from the HOA. You gotta look at ⁓ and make sure you have the most current addendums or you know, amendments to the HOA because they're very, very critical. ⁓ a lot of times it's hard to get ⁓ I mean they're but they they have to have ⁓ so. Jon G. Sanchez: That's a great point. Yeah, I was gonna ask, are they required to be given an escrow or any certain time period? Dwight Millard: Aaron, I th I John, I think they're actually before. I think you have to get them before. Yeah, as part of the contract. You have to have adequate time to re to review. Jon G. Sanchez: I would think before. See seems to me at some property about years ago. It seems to me I got it at escrow. I remember sitting there at the escrow, you at the conference table. Well, you can't. And that's and I think that's that that's why I ask. I think that's the intention. They're like, who in the heck when you're so excited to close, you're gonna sit there and read, you know, five inches of of documents, right? Yeah. Dwight Millard: See, I don't even know how you can review that. You gotta be able to sign off on it. Yeah. And it and it's boring and a lot of it's legal jargon, but you but you gotta take the time at least hit the highlights of it. People don't do it. I guarantee you. Jon G. Sanchez: Aaron, what what's Aaron, what's the liability of the of the agent to dis to read that or disclose it to their clients, or is it all on the clients? Aaron Clark, Edge Realty: Well, it's on the buyer. So the in the opening package, once the HOA documents are ordered, based upon escrow being open on a contract, they have a certain time period, the buyer to review those HOA documents and then accept them. So if they review the HOA documents and they go, ⁓ I found out I can't park my trailer there, I don't want to buy this house, then they can cancel as part of a contingency. Jon G. Sanchez: Okay. Okay. All right. pay those HOA dues on time. Don't let ⁓ stack up. They can sneak in and then next thing you know, here comes the the lien. And know those HOA laws state by state, right, Dwight? They're they vary state by state also. ⁓ topic, boys. Great job as always. We will do again tomorrow on the John Sanchez show. God bless. Have a great afternoon. Dwight Millard: Absolutely. Yes, yes.