Tuesday, May 27, 2008

Homeowners Associations: Better Check Their Books Before You Buy

Las Vegas SuburbThe fallout from the housing crisis has led to yet another worry for potential homebuyers: homeowners associations. Depending on the housing or condo development, homeowners associations can range from fairly minimal importance to extremely important. The more things the homeowners association is required to take care of, the more important they are. Typically condo homeowner associations take on more responsibilities because they are responsible for all the common areas, but many new home developments have been piling on added duties for their homeowners associations. Now, thanks to fallout from the housing crisis, many homeowners associations are in shambles and homeowners are feeling the pain.

In one development in Arizona, more than 40 percent of homeowners are not paying their homeowners association fees, and in others across the country, it is even worse according to USA Today. Typically, a homeowners association’s retaliation for non-payment is that they are able to place a lien on the delinquent homeowner’s home, but because property values of dropped so much and there is no equity in most of the homes, it isn’t doing any good. With the collection of unpaid dues appearing unlikely, the burden to maintain the homeowners association falls on the remaining homeowners who have paid their dues. If they fail to cover the excess, they will be faced with decreased services. Some of the problematic associations have even tried to put together volunteer days where homeowners can help provide some services themselves, such as landscaping, and save money.

Investors and homeowners alike should take note of this problem. The last thing (OK, one of the last things) an investor wants is to buy a house and then find out that the homeowners association is out of money so they can’t afford to keep up the grounds anymore, or they are going to have to cut insurance coverage. At that point, either the investor is going to have to pony up some more money or else watch the neighborhood go to waste along with the value of their investment, which might just happen anyway. Neighborhoods which are having trouble collecting on homeowners association dues are probably a safe bet to suffer from foreclosure and homeowner neglect: If people can’t afford to pay their homeowners association dues, they probably can’t afford the mortgage either or they could be investors who are simply walking away from a bad investment. Either way this is a bad sign for incoming homeowners.

That being said, investors and homeowners who are looking to buy a home in a development or condo with a homeowners association would be wise to take the extra step to examine the homeowners association’s books and responsibilities. If they see that an increasing number of homeowners are late or not paying, that could be a sign to move on, especially if the homeowners association has a lot of responsibilities. Even if you think you are getting a great deal on the property if the neighborhood’s upkeep goes, so goes the appeal and value of the neighborhood. In today’s market investors can be picky, so take the extra couple minutes to look at the books. It may just save you a big headache and hit to your pocketbook.

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9 comments:

May 28, 2008 at 12:37 PM zfolwick said...

So let me get this straight. . . people actually purchase homes and expect other people to keep up with maintenance?

Tell me- PLEASE- that I'm reading this wrong. please tell me that people who can't afford homes in the first place aren't purchasing those homes with the intention of paying out the nose for somebody to come by and cut the grass, and PLEASE tell me that this isn't a big, huge "OMGWTF people aren't paying their HOMEOWNERS ASSOCIATION DUES so we won't be able to come by and clip their grass anymore ohnoez! Teh horrorz!

Please tell me I'm mistaken.

May 31, 2008 at 6:33 PM Anonymous said...

Take a "couple of minutes to examine the books"?
What planet are you on?
HOAs are as "secretive as the CIA"
see:
http://loan.yahoo.com/m/primer13.html
HOAs are an organizational disaster because of the legislative obstruction happeningin all 50 states. A lobbying group of lawyers, property managers and vendors to associations have made it their mission to obstruct ANY legislation that would protect homeowners (their wallets) from these groups.
People have lost their home over $20 disputes with their HOAs. Guesss who wins their....the lawyers!

May 31, 2008 at 9:23 PM Eric Ames said...

Each HOA is very different. I've dealt with very straight forward HOAs and I've dealt with very difficult ones. I think this is the point though, if you can't gain access to the books, and the HOA gives you the run around, it probably is a sign that they are going to be a problem. Better to find out upfront then after it is too late and you've already bought.

All my homes which have HOAs send out at least yearly financial statements (typically with the bill for the coming years dues). While the HOAs may not give you (the buyer) the records directly, the seller should be able to access them without a problem. If the seller can't then it likely means they are trying to hide something or else the HOA is a difficult one. If it comes to that then don't buy the house, or else at least be prepared to face this potential issue.

July 26, 2008 at 1:32 PM Anonymous said...

Anonymous said...

"HOAs are an organizational disaster because of the legislative obstruction happeningin all 50 states. A lobbying group of lawyers, property managers and vendors to associations have made it their mission to obstruct ANY legislation that would protect homeowners (their wallets) from these groups.
People have lost their home over $20 disputes with their HOAs. Guesss who wins their....the lawyers."
This person is right! Mr. Ames wake up!v Talk to us, the victims. Made homeless due to greed. Far too many of us did nothing ewrong, owed nomonies, violated nothing. The vulnerable populations are first targeted. How would you like this targeting, terrorizing, harassment, sexual harassment and being told what they could do to stop their board pres. from fining, assessing and foreclosing, etc... (what happens to far too many single women). How would you like this done to your wife and child in your absence. You have no idea what this has cost innocent families? Whose job is it to fix this?
You should do your homework:
www.ahrc.com has some on all states too.

www.onthecommons.us The voice of the nation. Se all previous shows section.

www.hoadata.org TX
www.ccfj.net FL
www.drjoycestarr.com
www.hoanewsnetwork.com
www.chore.us
www.legalabusesyndrome.org
www.traumacenter.org
www.redressinc.org
Google;
HOA Gravy Train by Robert Metcalf.
I will post you a press release from NJ. Many other states have issued similar. Wake up!

July 26, 2008 at 1:34 PM Anonymous said...

From www.ahrc.com. MANY STATES ARE THERE ALL SAYING THE SAME THING!!!

NJ has issued about four of these. They also contacted other states, when requested.



Office of the Attorney General - Peter C. Harvey - New Jersey
Criminal Justice Department - P.O. Box 080
Trenton, New Jersey 08625-0080
Phone: 609-984-1936 Fax: 609-292-3508
http://www.state.nj.us/lps/
Rank: No ranking.
Summary: Message from AHRC

Homeowners in homeowner associations report widespread insurance fraud, conspiracy, and racketeering by board members, managers, lawyers, and judges.

If you know of anyone being victimized by your board, lawyer, manager and insurance company assigned lawyers, please take time to send a written fraud Complaint by email, fax or mail by clicking File Complaint link below
Other Information: Click this link to see: Insurance fraud investigation by the New Jersey Attorney General

Office of The Attorney General
- Peter C. Harvey, Attorney General
Division of Criminal Justice
- Vaughn L. McKoy, Director
Office of the Insurance Fraud Prosecutor
Greta Gooden Brown, Insurance Fraud Prosecutor
(609)896-8877

John R. Hagerty
Division of Criminal Justice
609-984-1936

Fraud report hotline at (877)553-7283 or (609)896-8957 - Erica

Division of Consumer Affairs - 973-504-6200
Division of Criminal Justice - 609-984-6500

Division of Consumer Affairs: at 1-800-242-5846, visit the Division's Web site at: www.NJConsumerAffairs.gov and/or e-mail by clicking the Letter or Complaint link below.

Options
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• File a complaint • View Complaint Summaries(0)
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Search our site for Office of the Attorney General - Peter C. Harvey - New Jersey ankSearch the internet for Office of the Attorney General - Peter C. Harvey - New Jersey



For more information, please check out the articles listed below:
· Problems With a Globe-Trotting Father - ALAN C. MILLER, JUDY PASTERNAK,
· HOMEOWNER ALLIANCE LAUNCHES NATIONWIDE PROTEST AGAINST CHUBB INSURANCE - AHRC News Services
· CNA Insurance is considering selling it's homeowner association Directors & Officers Liability policies through Community Associations Institute (CAI) - Eizabeth McMahon
· Elderly Face Retirement Nightmares in California Homeowners Association - AHRC News Services
· Battin deserts Desert Crest Homeowners - Peter Amherst
· Former California Insurance Agent Sentenced to Six Years - Insurance Journal.com
· Homeowner Association Insurance, A Sword, Not Shield - AHRC News Services
· CURING THE EVER INCREASING HOMEOWNER ASSOCIATION DUES PROBLEMS - HOA Voices
· The Homeowner Association FRAUD-FEST is over - HOA Voices
· Victimized by New London County Insurance and Rhode Island Condo Association Fraud - Judith Berry
· Homeowner Associations Insurance Fraud Alive and Well All Across America - Alex Lyte
· Insurance Fraud Investigations and protecting the public - Peter C. Harvey - Attorney General - New Jersey

NJ Courts Agency:
Information about New Jersey Courts online.com

New Jersey Courts online.com
Richard J. Hughes Justice Complex - 25 Market Street
Trenton, New Jersey 08625
Phone: (609) 292-8470 Fax: (609) 777-0844
http://www.judiciary.state.nj.us/
Rank: No ranking.
Summary: This is a very organized and educational website for the public.

Mission Statement

We are an independent branch of government constitutionally entrusted with the fair and just resolution of disputes in order to preserve the rule of law and to protect the rights and liberties guaranteed by the Constitution and laws of the United States and this State.

Vision Statement

We will be a court system, characterized by excellence, that strives to attain justice for the individual and society through the rule of law. We will:

* Provide equal access to a fair and effective system of justice for all without excess cost, inconvenience, or delay, with sensitivity to an increasingly diverse society.
* Offer complementary methods of dispute resolution while preserving the constitutional right to trial by an impartial judge or jury and ensuring compliance with the results achieved through effective enforcement of court orders.
* Provide quality service that continuously improves, that meets or exceeds public expectations, and that ensures that all are treated with courtesy, dignity, and respect.
* Maintain the independence of the Judiciary while strengthening relations with the public, the bar, and the other branches of government.
* Acknowledge and enhance the potential of every person in our organization to contribute to the administration of justice through participation, training, and technology.
* Share a sense of common identity and purpose as a statewide Judiciary.
* Earn the respect and confidence of an informed public.

Statement of Core Values

Required to accomplish our mission are four paramount values representing the core of what we stand for as an organization:

* Independence
* Integrity
* Fairness
* Quality Service
Other Information: Mercer Vicinage Ombudsman
Judith Irizarry - Ombudsman
(609) 571-4013
209 South Broad Street, 4th Floor
P.O. Box 8068
Trenton, New Jersey 08650-0068
------------------------------------------------------------------------

Origin and Definition:

The term Ombudsman has its origin in Sweden. It means representative and it is a gender neutral term. The Black's Law Dictionary defines it as: "an official or semi official office or person to which people may come with grievances connected with government. The Ombudsman stands between, and represents, the citizen before government." The Supreme Court of New Jersey mandated the establishment of an Ombudsman program for the Judiciary. The Mercer Vicinage Ombudsman Office was created in May of 2001.
------------------------------------------------------------------------
Purpose:

To promote an environment of continuous improvement in areas of customer service and equal court access in compliance with court policies and procedures by establishing effective mechanisms for:

* Public Information
* Community Relations
* Citizen Assistance

------------------------------------------------------------------------

Public Information:

The Ombudsman works with the court divisions, municipalities and county personnel to develop and provide customers with updated information related to court services and processes.

The Ombudsman reviews signage, bulletin boards, lobby information booths, web pages, publications, and materials for self represented litigants and linguistic minorities.

The Ombudsman provides training and information on Judiciary policies, procedures, public information and customer service.The Ombudsman works with media contacts to provide information about services and educate the public about the court system. The Ombudsman maintains updated materials related to social and legal service entities in the community.
------------------------------------------------------------------------

Community Relations:

The Ombudsman is responsible for community outreach efforts that familiarize the public with the court system to promote an environment of public trust and support. The Ombudsman initiates, coordinates and participates in Court Tours, Speakers Bureau, Law Day, training programs and other special events. The Ombudsman visits community organizations and participates in committees.
------------------------------------------------------------------------

Citizen Assistance:

The Ombudsman:

* Confidentially receives and documents complaints from the public related to misunderstandings, conflicts, mistreatment or discrimination in the courthouse. The Ombudsman reviews facts and provides recommendations to improve existing services and develop new ones.
* Acts as a mediator to resolve conflicts between the public and the courts. The Ombudsman provides information related to established legal system complaint and disciplinary procedures.
* Serves as a point of contact to citizens who may need assistance in coordinating multiple court services during their visit to the courthouse.
* Responds to inquiries related to court processes, court services and referrals to other agencies of government.
* Collects and reviews customer suggestion forms.

------------------------------------------------------------------------
Complaints, inquiries, requests for assistance and/or suggestions may be submitted in person, by telephone or in writing.

Judith Irizarry - Ombudsman
(609) 571-4013
209 South Broad Street, 4th Floor
P.O. Box 8068
Trenton, New Jersey 08650-0068

Options
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Search our site for New Jersey Courts online.com /www.google.com/search?q=New+Jersey++Courts+online.com" target=_blankSearch the internet for New Jersey Courts online.com



For more information, please check out the articles listed below:
· Case Number: DOCKET NO. C-121-2000 - Committee for a Better Twin Rivers RIVERS v Twin R





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July 26, 2008 at 1:35 PM Anonymous said...

The HOA Gravy Train

Robert Metcalf

As a result of one of my recent comments the American Homeowners Resource Center has requested that I elaborate on the phrase “HOA Gravy Train” which, I use to describe the current state of affairs with regard to the business of “servicing” Homeowner Associations.

Dictionary.com defines “gravy train” thusly:


A position in which a person or group receives excessive and unjustified money or advantages with little or no effort:

As a resident and former treasurer of my HOA, located in Chadds Ford, Pennsylvania, I am intimately familiar with how this industry functions. In a word, it is appalling.

All Aboard … Next Stop - Your Bank Account

Servicing HOAs represent a business opportunity that, for its practitioners, is almost unique in its capacity to fleece its “customers”. Where else can you find

An extremely large client base, approximately 60,000,000, that cannot say “no”, as almost all HOAs are mandatory.
Due to the incestuous relationship between the state legislators and the legal PACs that support them, it compels individuals to abide by laws written by the same people who benefit from them.
Is guaranteed to go on forever because of deed restrictions that “run with the land in perpetuity”.

Last year my HOA decided to change management companies. During the interview with the representative of the company we did finally hire, it became apparent that we would realize a reduction in annual operating expense of about $20,000.00, which is significant for a community of our size. I was elated, as when it was included in the proposed budget for the next fiscal year, it would translate into an $11.00 per month reduction for the residents. Who wouldn’t appreciate that? Well, the prospective manager’s reaction was; “You never give it back …”. I was stunned. The president, an insufferable busybody with a messianic complex who judges the accomplishments of the Board by how "busy" he has been as opposed to any concrete achievement, was delighted. He now could retain funds for no apparent reason and justify it by claiming that it was recommended by a “professional”. I felt my seat jerk, as we left the station…

Hey, Where Did My $50,000,000,000.00 Go?

The whole issue with HOA finances is confidence. Not the board’s confidence in the management company, but vice-versa; the management company’s confidence in the board to follow their every suggestion on how to “properly” run their own lives. This is of paramount importance, because if the board ever realizes that maybe life would be easier without “professional management” … you would have an HOA Gravy Train Wreck, and as every sycophant knows, a gravy train wreck is the worst disaster imaginable.
The CID industry really should look to P.T. Barnum as its spiritual father. By performing a proper “cold read” of an individual board member, a management representative will know just how to appeal to that director to sell him whatever it is he wants. You see, at the heart of every relationship, be it personnel or business, is the concept of give and take. I give something to you and you give something to me in return. In the HOA/management relationship the two things exchanged are ego gratification for money. In their absolutely essential book Villa Appalling, Donie Vanitzian and Stephen Glassman go into some detail about the psychological makeup of the “Alpha Dog” board member. One of the primary characteristics of “Alpha Dog” is his or her penchant to be on the “inside”. Vico Confino in his book The Wrath Of Condo describes this in exquisite detail, as well he should because this is the bedrock on which the HOA Gravy Train’s tracks are laid, I mean you can’t separate a fool from his money if you have no fool. So how does the CID industry turn what was probably a reasonable, if internally troubled, adult into the “jackpot”, as the CAI likes to call it, from which $50,000,000,000.00 per year is extracted without apology. Here’s how:

Trumpet your “professionalism” with endless acronyms and alphabet soup. Just imagine how impressed Alpha Dog will be if you roll in and announce; “Hi, I’m Joe Manager CMCA, AMS, PCAM, LSM from MANCO. I have passed my M-100 and completed my PMDP program from NBC-CAM and I’m here to help you get your lawn mowed.” Who wouldn’t be impressed with that? I wouldn’t. These “certifications” cost between $45.00 and $295.00 a piece and can be purchased on the Internet.
Make Alpha Dog immediately believe that he or she is on the “inside”, and is special in your eyes. Alpha Dog, because of his’ or hers’ outrageously distended ego, will instantly fail to see the forest for the trees, and will accept whatever you say without even questioning it. Why? Because to question it would indicate that Alpha Dog was on the “outside” and everyone who is on the “inside” knows what you’re saying is the truth.
Lay the groundwork to leverage the “Fatal Flaw” to your advantage. History has proven time and time again that the personal acrimony resulting from neighbor ruling over neighbor is your biggest potential payday. Since the currency of trade at the board/resident level is ego, you will always be assured of a certain amount of insanity because of it, especially with Alpha Dog at the helm. Be sure to stress how important “covenant violations” are, even though probably until you bring them up as a result of one of your “inspections”, nobody would even be aware of them. Of course, you’ll get 20% of any fines assessed.
Make sure you don’t take responsibility for anything, that way if something goes wrong you can just walk away. Tell Alpha Dog that you are the HOA’s Agent. That will impress the hell out of him or her, I mean only movie stars and professional athletes have agents, right?
Finally, make sure that each board member is aware of their “fiduciary responsibility”. Alpha Dog will muse to himself. “Jeez, I have a fiduciary responsibility, I must be important … Maybe if I do real good with this I can get appointed to the Supreme Court!” Your success in this overrides everything, because this “fiduciary responsibility” is what will convince the board to have allegiance to the legal fiction that is an HOA, as opposed to real people. This is what will empower Alpha Dog to commit the most heinous, unconscionable acts against his neighbors conceivable, and do so with a self-righteous certitude that George Bush would be proud of. In short, it turns the “HOA Gravy Train” into the “Poor House Express”.
Attention, Attention … Poor House Express Leaving On Track 9

One day, Alpha Dog was sitting around, trying to figure out how to aggrandize himself when the phone rang. It was one his “subjects” who posed a very important and serious question; “Does 2 plus 2 really equal 4?” Alpha Dog was at a loss. He thought he knew the answer, but given weighty nature of the question he decided to call Joe Manager for some “professional advice”. After all, Joe had stressed to him how vital it was to take advantage of his “experience”. He made the call.

When Joe finally got back to Alpha Dog, some days later, he replied,

“Hmmm … do 2 plus 2 equal 4? That’s a tough one. I better pass this on to our accounting division. They will be able to get you an answer.”

A week later, Alpha Dog gets a reply from Joe.

“Our accounting department believes the answer is yes, BUT, because we are only your “agent” we’re reticent to commit to a resolution. I think just to be on the safe side we better call in an expert. It’s going to cost you $250.00 per hour, plus travel expense, but it will be worth it, believe me.”

Alpha Dog couldn’t believe his ears. He had achieved a level of prestige that not he, in all his puffed up glory, could have imagined. He needed consultants!

At the next board meeting Joe Manager brought I. C. Profit with him. Mr. Profit had been doing “Community Association” work for 20 years. Who could blame him? At $250.00 per hour, plus expenses, he had hopped on the HOA Gravy Train years ago and never gotten off. Answering questions that really anybody with a high school education would be capable of, had they not been enfeebled by the incessant ranting of MANCO, was just fine with him.

Alpha Dog: “We appreciate you taking time from your busy schedule to helps us. What did you find out?”
Mr. Profit: “Well, according to GAP (Generally Accepted Accounting Principles), 2 plus 2 does equal 4. HOWEVER, really the answer depends on what your documents say about the matter. To really be sure you should consult an attorney who specializes in CID law. This is something that has to be clarified before I can commit to the position I have stated”.

Alpha Dog was euphoric. It was just like what the CAI had had described at their most recent “round table”, which he had attended, at the expense of $65.00 to the homeowners. “An HOA is a business – run it like one”. Everybody knows that real corporations have lawyers, legions of them, and now “The Reserves At Beige Meadows, INC.” was going to have some too.

Joe Manager recommended the firm of “Stealing, Fleece, and Loot”. I. M. Stealing, one of the principals of the firm, had been instrumental in creating the state’s “Planned Community Act”. Through his membership in the CAI, he had been able to successfully lobby the state legislature on behalf of “all the residents who live in community associations” about a variety of issues. Joe suggested that Alpha Dog call Mr. Stealing for an “initial consultation”. Alpha Dog’s heart started to race in anticipation.

The next day Alpha Dog called Mr. Stealing. Even though Mr. Stealing’s fee was $600.00 per hour, Alpha Dog knew it would be worth it. After some initial niceties, which lasted 45 minutes, Alpha Dog discovered that Mr. Stealing lived in the exclusive neighborhood of “Old Town” where the homes start a $2,000,000.00 and there is no HOA. How odd. Then they got down to business.

Alpha Dog: “Well Mr. Stealing, I know Joe Manager has alerted you to our problem, what do you think?”
Mr. Stealing: “Well Alpha, before I can give you an answer I will have to study your documents. Can you get a copy to me? The law is very complicated when it comes to common interest developments. They are all different and require a considerable amount of effort to understand.”
Alpha Dog: “Yea, I know what you mean. I hope my residents appreciate what people like you and Mr. Profit do for them. We would be lost without you.”

Well, of course it’s complicated, Mr. Stealing wrote the law and paid good money to see that it got passed.

A couple of weeks, and 4.6 billable hours later, Alpha Dog received a reply from Mr. Stealing. There was a problem. According to Mr. Stealing, the developer had failed to define “2” in the declaration. This meant that before Mr. Stealing could provide an answer the declaration would require an amendment to define “2”. Alpha Dog fell silent. What do we do now? Mr. Stealing consoled him. “Don’t worry, I can help you. It happens all the time. I’ve got a lot of experience dealing with issues such as this.” Alpha Dog felt a wave of relief course through his body.

Six weeks later, Alpha Dog received the phone call he had been waiting for. Mr. Stealing announced that he had constructed a proposed amendment to the declaration to define 2, and that with the board’s approval, he would consult with Joe Manager, from MANCO, about setting up a community meeting to adopt it. Alpha Dog requested a copy of the proposed amendment.

Article 1 Section 2 “Definitions”:
The addition of the following:

2: The cardinal number that is the sum of one and one or a numeral representing this number.

Mr. Stealing then related to Alpha Dog that it had take 12.3 hours to prepare the amendment and that, along with the previous 4.6 hours would bring his total fee to $10,140.00. Alpha Dog acknowledged that he wasn’t surprised, given how complicated all of this was.

Of course there was quite a bit of preliminary work to be done, but MANCO assured Alpha Dog that they would take care of it. Joe Manager produced a list of items for the board to consider:

We have to notify all the first mortgagees, as their approval is necessary for any changes to the declaration. Estimated cost, postage and time: $235.00
We have to notify all the residents of the meeting concerning this. We could do it through the mail, but a meeting is so much better. Estimated cost, postage and printing: $175.00
Of course, Joe Manager must attend. Estimated Cost: $125.00
Also, it would be foolish not to have Mr. Stealing there to answer any questions about the amendment. Estimated Cost: $1,200.00.
I also think that since this is an accounting matter it might be a good idea to include Mr. Profit, as it is finally his opinion that will make the difference. Estimated Cost: $500.00.
Finally, if the amendment is approved, we will have to record it at the county courthouse. Estimated Cost: $100.00.

Alpha Dog totaled the bill:

Mr. Profit: $1,032.00
Stealing, Fleece, and Loot: $11,340.00
MANCO: $535.00
Recording Fee: $100.00

Total Cost: $13,007.00

Alpha Dog thought to himself, “Not so bad when you consider the kind of high-powered talent required to correct such a serious problem, and besides, we can just levy a “special assessment” to pay for it. The community will understand when they realize how important this is, I mean anything that costs $13,000.00 has got to be important, Joe taught me that”.

Well, the night of the big meeting arrived. It was to be held in the community room at the local mall. In attendance along with the Board, Mr. Stealing, Mr. Profit, and Joe Manager were … wait a minute, what happened? They outnumbered the residents 2 to 1. That’s right, only 4 residents showed up. How could that happen? Don’t they know the amount of work we have all put in to this?

Joe Manager comforted Alpha Dog. “Don’t worry, I see this all the time. We’ll take care of it another way, by mail or in person.” Alpha Dog felt better. Joe knew what he was talking about and had never led Alpha Dog astray in the past.

Six months later, after an intensive personal contact initiative the amendment passed and was recorded, at an additional cost of $575.00. Mr. Stealing and Mr. Profit submitted their opinion: 2 plus 2 does in fact equal 4.

As Alpha Dog eased back in his chair with that deep sense of satisfaction that only a “job well done” can elicit, a thought came to him; Isn’t it ironic that now, since it has been established that 2 plus 2 does equal 4, that would be the exact amount left in the “Reserves At Beige Meadows” operating fund, on deposit with The Community Association Banc (Banc with a “c”, just like in James Bond movies). Alpha Dog just smiled, “those guys really know what they’re doing, they even managed to stay within our budget.”

This Train Don’t Stop For Nobody

The real money to be made from the HOA Gravy Train is from legal fees and foreclosures. In most legal actions, both parties have something to loose. Again, due to the perverse sense of justice, endemic to the HOA universe, this is not the case. When I was a director of my HOA I was protected by a $3,000,000.00 insurance policy. No matter what I did, short of an outright criminal act, could I be held personally responsible for my actions. When you combine that with a rapacious HOA legal firm, the kinds of things that result truly staggers the imagination.

If you were a board member, could you ever, ever in your wildest dreams actually foreclose on one of your neighbors? I don’t think if you asked anyone that question they would say yes. If that’s the case, how does it happen?

I love the History Channel. Every now and then they do shows about the concentration camps in Germany during World War II. One of the most famous pieces of footage is where you see about 100 prisoners digging there own graves and when they have finished the German soldiers shoot them dead where they stand. The question I always had was, who are those soldiers? When you look at the film they look like young kids, 18, 19, maybe 20 years old. How could they do that? Furthermore, if 2 or 3 or 4 years before that incident, you asked any one of them whether he could see himself participating in something like that, how many would answer yes? I don’t think any of them would. So how do things like that happen?

I think that as they often do, Hollywood provides an answer. In the 1974 movie, Chinatown, when Jake Gittes (Jack Nicholson) confronts Noah Cross (John Houston) about him fathering his own granddaughter, Noah Cross replies:

“See, Mr. Gitts, most people never have to face the fact that, at the right time and the right place, they're capable of... anything!”

I think the same holds true for the board of a HOA. All the managers, service providers, and legal firms need the board to believe in this fraudulent “fiduciary responsibility” to the association, which itself is nothing more than a legal specter, whose so reason for existence is to enable the HOA Gravy Train to remain on schedule. Any possible consideration for the actual human beings who live in a community governed by one of these aberrations has long since evaporated into nothing, leaving behind only the scavengers to pick at the bones.

This “fiduciary responsibility” has to become a religion, because without that blind conviction on the part of the board, the HOA Gravy Train will derail and the money will stop flowing. That can never be allowed to happen.

What about the resident who says, “I like the rules, they keep up property values”.
Cardinal Richelieu once said, “If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him”. In a HOA everybody is guilty, of something. It’s only a matter of time before a confluence of events places virtually everyone in the crosshairs, and then the CID industry starts to work its magic.

Is it a conspiracy? No, I think “Grand Falloon” would be a closer description. A grand falloon is a collection of people or groups that have no prior knowledge of, or relationship with each other, yet act in cooperation to achieve a shared goal. Think of it as the crew who runs the HOA Gravy Train.

Here is an example of this phenomenon. My community is located in Chadds Ford, PA. The CAI has a local chapter with a website, http://www.cai-padelval.org. Up until the end of last year we were managed by Mid-Atlantic Management Company, http://www.mamc.com that is owned by Associa, http://www.associaonline.com who’s CEO is John J. Carona http://www.associaonline.com/Corp/About/Leadership/jcarona.htm who just happened to have “served three terms as a member of the Texas House of Representatives and currently holds the office of Texas State Senator, to which he was elected in 1996. He has also served the community as a bank director and as the personal advisor for the real estate departments of several area financial institutions. In 1999, Mr. Carona was named "Legislator of the Year" by the Texas Chapters of the Community Associations Institute, and in both 1999 and 2001 he was named to the "Legislative Hall of Fame" by the Texas Association of Realtors.”
Gee, do you think there might be a conflict of interest?

The CAI-PADELVAL website is unremarkable, however, every time you access the home page a new banner ad appears at the top. Mid-Atlantic is one of those ads. Now lets look at my HOA’s “service providers”.

Insurance: We use Smith Insurance Co. They have an ad.
Banking: We use Community Association Banc. They have an ad.
Attorney: We were going to use Steven L. Sugarman, however the issue resolved itself. He has an ad.
Reserve Study: We use The Falcon Group. They have an ad.
Our Audit: We use Andrew Kellock. He has an ad.
Landscaping: We use Shearon Environmental. They are listed in the business directory.

Mid-Atlantic Management Co recommended all of these vendors. The real lesson here is that our board followed every suggestion that Mid-Atlantic proposed. Once the HOA Gravy Train hits the “mainline” and starts to “highball” no one can get off.

The “HOA Gravy Train” Theory Of Relativity: E = mc2

Einstein’s Theory Of Relativity states, among other things, that matter and energy have equivalence. Energy = Mass x Speed Of Light (the limit of speed) squared. I propose a new theory:

E (Equity) = M (Money) X C (CAI members greed, also a universal maximum) Squared

For the HOA legal firms, who are at the apex of the HOA food chain, the above equation takes on a special meaning. Unlike the service providers who convert equity into money at a controlled rate, much like a nuclear power plant, the law firms do it quickly, and with devastating effect, much like an atomic bomb. Anyone who has ever read about some of the horrific cases involving foreclosures or “reasonable” legal fees that sometimes run into six figures are witnessing the HOA version of nuclear war. Much like launching an ICBM, once a case is turned over to an HOA legal firm, it is impossible to recall. The process of converting the hapless property owner’s equity into money has begun, and even the board cannot stop it. All of the constant harping on the part of the management company about the board’s “fiduciary responsibility” comes into play as the board “inserts their launch keys” and turns them on the management company’s “mark”. This is the “Equity Powered Runaway HOA Gravy Train” powered by the conversion of equity into money. Once this happens in a community it can never be the same. Everyone who lives there, whether they want to admit it or not, will have in the back of their minds that yes, you can loose your house over how many rose bushes you planted.


How Can The HOA Gravy Train Be Stopped

This country was built on the idea of individual strength combined with a voluntary sense of community. The fact that we find ourselves in the present situation should not surprise anyone, as the existence of other corporately controlled “gravy trains” is as old as this country. All one has to do is to look at the various stock market “combinations” that span time from the 1800s all the way up to the present day. For all the CAI’s pompous articulations about being “the new way to responsible community living”, in the end they are just another bunch of con artists, plying their trade on an unsuspecting public, to put money in their pockets. It’s no more glamorous than that. For our part, here are a few ideas on how to at least slow down if not stop the HOA Gravy Train.

If there is a dispute in your community, insist that a sense of charity reign supreme. Every week people soliciting for various charities approach me. This is the embodiment of what it means to be an American citizen. Why not adopt a similar attitude towards your own neighbors. Everyone who lives in an HOA should have at least one year to clear up any debt, before any action is taken.
If an action at law must be taken, use small claims court. You’ll never here the CAI recommend this. NO LAWYERS ALLOWED, hence, no outrageous, ruinous attorney fees which, by the way, the HOA never sees.
Finally, never, never, never, never, initiate a foreclosure action on one of your neighbors. THIS IS A LIFE DESTROYING EVENT, THE FRUITS OF WHICH WILL GO ALMOST ENTIRELY TO THE LAW FIRMS.
LIVE BY THE GOLDEN RULE.

The next time you hear one of your self-absorbed board members start to talk about his or her “fiduciary responsibility” just remember, that’s the management company talking, that’s the CAI talking, that’s the legal firms talking, all to keep the HOA Gravy Train on the track and on schedule, at your expense of course.

Robert Metcalf
Chadds Ford, PA

July 26, 2008 at 1:39 PM Anonymous said...

CALL IT UCIOA or TUPCA --At the end, distraught homeowner breaks down, threatening to take her own life to end ongoing horrors with her HOA
From Florida's site as it is easiest to access:

1. Here is the actual video of the hearing in TX. You really need to listen to Mrs. West appox. 17 min into hearing. Their HOA started on them over grass and she informs the legislature of the attack on the advocacy, (Mag. Cover). It is about 35 min and near the end, is the testimony of the terribly distraught Arshia Khurshid.
Just click: watch complete video of testimony (purple).
2. Interview of TX Advocacy, Barbara Gatlin and Arshia, www.onthewcommons.com ---09-07-06


CALL IT UCIOA or TUPCA --
HOMEOWNERS' ADVOCATES WILL FIGHT IT ALL OVER THE NATION

WATCH COMPLETE VIDEO OF TESTIMONY
Texas Senate Committee on Intergovernmental Relations
COMPLETE SESSION; Interesting testimony starts at 1:28
At the end, distraught homeowner breaks down, threatening to take her own life to end ongoing horrors with her HOA.


An Opinion By Jan Bergemann
President, Cyber Citizens For Justice, Inc.
October 5, 2006

The Community Associations Institute (CAI) may call it whatever they want -- Uniform Common Interest Ownership Act ( UCIOA) or Texas Uniform Planned Community Act (TUPCA) -- it's all the same. Under the cover of creating a balanced, uniform, statewide law for the creation and operation of mandatory homeowners' associations they are trying to take away homeowners' constitutional and property rights. These bill proposals are popping up all over the nation, under various names, but they all have only one target: To establish a bigger income for the service providers and to fleece the homeowners who live in these associations.

Specialized attorneys that grow wealthy from these associations sponsor these bills. On the Texas TUPCA website one quote surely stands out: "TUPCA may be the first state statute in the country to devote an entire chapter to protecting the rights of individual homeowners." I think that's about the boldest false statement I have ever heard! When any proposal takes away constitutional and property rights from United States citizens, that creates a dictatorship. It doesn't protect peoples' rights, no matter what its proponents claim. This is another one of these "FEEL GOOD" bills that achieves nothing -- no enforcement, no accountability -- but tries to tell legislators that enacting this bill will bring the necessary reform to their constituents!

On Monday, October 2, 2006 in a Texas Senate Committee hearing homeowners' advocates from all over Texas made it very clear to the senators how homeowners feel about this bill. Read below the presentation of Beanie Adolph, a long-term Texas homeowners' advocate -- part of the Adolph family that created the well-known website HOA-DATA that finally exposed the foreclosure abuse in homeowners' associations.

In impressive fashion Texas homeowners delivered a testimony that clearly showed the senators what homeowners really think about TUPCA and the even bolder attempt to take away constitutional rights under the cover of "protecting" homeowners. Shame on the attorneys who wrote this bill. You can watch the testimony by CLICKING THIS LINK !

The Homeowners' Advocates came armed with two weapons, besides their heart-wrenching testimonies: Robin Lent held up the cover of the CAI Magazine Common Ground to show how the CAI executives really feel about homeowners' advocates. And they exposed Florida's Richard Spears as the CAI propagandist he really is – a person who, under the pretense of fighting for association rights, has absolutely no consideration for the United States Constitution and private property rights. Spears quote: "Buyers surrender their civil rights," says it all! (Note: Spears is a member of Florida's Commission on Ethics!)
="http://ccfj.net/CAICGcover.html" target=_blank


Two Clear Lake advocates, Gwen Gate and Roberta Toppin, described the difficulties in their HOA to the Senate committee.

Barbara Gatlin, President of Texas Homeowners for HOA Reform, Inc. announced the AARP BILL of RIGHTS for HOMEOWNERS in ASSOCIATIONS, and presented a copy to each of the Senators. This Bill of Rights was created as a model statute that covers the Basic Principles of Consumer Protection. Even if some homeowners' advocates feel that it falls short of being a perfect bill of homeowners' rights, it definitely creates much needed protection for homeowners, much easier enforcement of the regulations and accountability of the people in charge.

This bill, if enacted, will give homeowners protections they desperately need. And homeowners all over the nation will introduce it to their local legislators and explain to them that this is what we owners need to protect our homes against abuses -- protection desperately needed in "The Land Of The Free"!

Any legislator who agrees with UCIOA or TUPCA should be considered an enemy of the United States Constitution, because agreement with those proposals shows a willingness to take away our constitutional, civil and property rights!

--------------------------------------------------------------------------------

From: Beanie Adolph – Texas Homeowners for HOA Reform, Inc.
We do not like TUPCA. TUPCA is contrary to the Texas Constitution. Article I – Bill of Rights, Section 26: "Perpetuities…are contrary to the genius of a free government and shall never be allowed…"
TUPCA 83.004 states: "…the rule against perpetuities does not apply…"
TUPCA 83.151 – "…the rights listed…are not exclusive or intended to limit the rights guaranteed by the Constitution and laws of the United States and this state." Yet section after section gives unlimited powers to the HOA board.
Sec.83.067 states that the governing documents will be liberally construed in favor of the organization - not the homeowner. I've been here almost 50 years and I know that this is totally contrary to Texas law – an individual rights state. Governing documents should exist to serve homeowners, not the association.
TUPCA 83.113 – Architectural standards means a person or persons with power to approve or deny applications for proposed construction, etc. Here you have American homeowners who have bought their homes, hold responsible jobs, raise their children and TUPCA forces them to be subject to an unknown entity who will control their lives.
TUPCA 83.114 – Accumulation of Assessments. This is a booby-trap for homeowners and a boon to the greedy industry. Most homeowners are on budgets and cannot bear a sudden demand for exorbitant assessments with the alternative being foreclosure. This appears intended to overrule the Brooks case where the Supreme Court ruled 9 – 0 for homeowners. Associations don't need this power. It encourages excessive spending without accountability to the homeowners who pay the bills.
TUPCA 83.116 – Foreclosure – Obscene for an HOA to have this power. Nobody else does – not doctors or other professions – not even Enron. But TUPCA makes it worse: "A court may not set aside a sale under this section solely because the purchase price at the foreclosure sale was insufficient to fully satisfy the former owner's debt to the association."
TUPCA 83.204 – puts the burden of disclosure on the seller of the property to advise the purchaser of HOA rules and assessments. Sellers won't do this correctly. That won't protect buyers. –Buyers won't know what CAI knows. On this I agree with CAI's Dick Spears who said buyers "surrender their civil rights". He said buyers do it voluntarily. We say buyers don't know.." Do you honestly believe that Texas homeowners voluntarily surrendered their civil rights when they bought their homes?
There are major problems with Property Code 204. Our website www.HOAdata.org. shows how foreclosure lawsuits grew in Harris County alone after passage of 204. At first 204 only applied to Harris County. It's bad enough that 204 was recently expanded to adjacent counties. TUPCA would make this a truly statewide problem. TUPCA says it must be statewide. We from Harris County are here to warn all Texans that TUPCA takes away basic property rights. TUPCA means a homeowner does not own his own home. Do your constituents know what you are considering? Do your children, grandchildren, relatives and friends know that you are considering denying them their rights "in perpetuity"?
As TUPCA states – 83.012 – Uniformity of Application: – Any amendment… to limit this application to less than the entire state, e.g. population or geography is void.
For decades basic Texas law has said that deed restrictions must be clear and that limitations on the use of property are disfavored. TUPCA 83.067 has overturned this. TUPCA says the DRs don't have to be clear.
TUPCA 83.116 (a) creates the right to foreclosure even if it is not in the deed restrictions. That should violate the Texas Constitution because even Inwood and Brooks require the right to foreclose be included in the deed restrictions.
TUPCA 83.116 (b) seems to allow an association to sell your house by non-judicial foreclosure without going to court and even allows the association to buy the house at firesale prices. That creates a real incentive to trump up and boost the fees. Look at the long list of laws CAI has had enacted against the homeowner. Stop these anti-homeowner laws. Represent your constituents – the people of Texas. Do not take any portion of TUPCA. Support the Homeowner Bill of Rights.
Thank you.


NEWS PAGE HOME HOA ARTICLES


--------------------------------------------------------------------------------
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FL's site as it is easiest to access:







CALL IT UCIOA or TUPCA --At the end, distraught homeowner breaks down, threatening to take her own life to end ongoing horrors with her HOA

1. Here is the actual video of the hearing in TX. You really need to listen to Mrs. West appox. 17 min into hearing. Their HOA started on them over grass and she informs the legislature of the attack on the advocacy, (Mag. Cover). It is about 35 min and near the end, is the testimony of the terribly distraught Arshia Khurshid.
Just click: watch complete video of testimony (purple).
2. Interview of TX Advocacy, Barbara Gatlin and Arshia, www.onthewcommons.com ---09-07-06







CALL IT UCIOA or TUPCA --
HOMEOWNERS' ADVOCATES WILL FIGHT IT ALL OVER THE NATION

WATCH COMPLETE VIDEO OF TESTIMONY
Texas Senate Committee on Intergovernmental Relations
COMPLETE SESSION; Interesting testimony starts at 1:28
At the end, distraught homeowner breaks down, threatening to take her own life to end ongoing horrors with her HOA.


An Opinion By Jan Bergemann
President, Cyber Citizens For Justice, Inc.
October 5, 2006

The Community Associations Institute (CAI) may call it whatever they want -- Uniform Common Interest Ownership Act ( UCIOA) or Texas Uniform Planned Community Act (TUPCA) -- it's all the same. Under the cover of creating a balanced, uniform, statewide law for the creation and operation of mandatory homeowners' associations they are trying to take away homeowners' constitutional and property rights. These bill proposals are popping up all over the nation, under various names, but they all have only one target: To establish a bigger income for the service providers and to fleece the homeowners who live in these associations.

Specialized attorneys that grow wealthy from these associations sponsor these bills. On the Texas TUPCA website one quote surely stands out: "TUPCA may be the first state statute in the country to devote an entire chapter to protecting the rights of individual homeowners." I think that's about the boldest false statement I have ever heard! When any proposal takes away constitutional and property rights from United States citizens, that creates a dictatorship. It doesn't protect peoples' rights, no matter what its proponents claim. This is another one of these "FEEL GOOD" bills that achieves nothing -- no enforcement, no accountability -- but tries to tell legislators that enacting this bill will bring the necessary reform to their constituents!

On Monday, October 2, 2006 in a Texas Senate Committee hearing homeowners' advocates from all over Texas made it very clear to the senators how homeowners feel about this bill. Read below the presentation of Beanie Adolph, a long-term Texas homeowners' advocate -- part of the Adolph family that created the well-known website HOA-DATA that finally exposed the foreclosure abuse in homeowners' associations.

In impressive fashion Texas homeowners delivered a testimony that clearly showed the senators what homeowners really think about TUPCA and the even bolder attempt to take away constitutional rights under the cover of "protecting" homeowners. Shame on the attorneys who wrote this bill. You can watch the testimony by CLICKING THIS LINK !

The Homeowners' Advocates came armed with two weapons, besides their heart-wrenching testimonies: Robin Lent held up the cover of the CAI Magazine Common Ground to show how the CAI executives really feel about homeowners' advocates. And they exposed Florida's Richard Spears as the CAI propagandist he really is – a person who, under the pretense of fighting for association rights, has absolutely no consideration for the United States Constitution and private property rights. Spears quote: "Buyers surrender their civil rights," says it all! (Note: Spears is a member of Florida's Commission on Ethics!)
="http://ccfj.net/CAICGcover.html" target=_blank


Two Clear Lake advocates, Gwen Gate and Roberta Toppin, described the difficulties in their HOA to the Senate committee.

Barbara Gatlin, President of Texas Homeowners for HOA Reform, Inc. announced the AARP BILL of RIGHTS for HOMEOWNERS in ASSOCIATIONS, and presented a copy to each of the Senators. This Bill of Rights was created as a model statute that covers the Basic Principles of Consumer Protection. Even if some homeowners' advocates feel that it falls short of being a perfect bill of homeowners' rights, it definitely creates much needed protection for homeowners, much easier enforcement of the regulations and accountability of the people in charge.

This bill, if enacted, will give homeowners protections they desperately need. And homeowners all over the nation will introduce it to their local legislators and explain to them that this is what we owners need to protect our homes against abuses -- protection desperately needed in "The Land Of The Free"!

Any legislator who agrees with UCIOA or TUPCA should be considered an enemy of the United States Constitution, because agreement with those proposals shows a willingness to take away our constitutional, civil and property rights!

--------------------------------------------------------------------------------

From: Beanie Adolph – Texas Homeowners for HOA Reform, Inc.
We do not like TUPCA. TUPCA is contrary to the Texas Constitution. Article I – Bill of Rights, Section 26: "Perpetuities…are contrary to the genius of a free government and shall never be allowed…"
TUPCA 83.004 states: "…the rule against perpetuities does not apply…"
TUPCA 83.151 – "…the rights listed…are not exclusive or intended to limit the rights guaranteed by the Constitution and laws of the United States and this state." Yet section after section gives unlimited powers to the HOA board.
Sec.83.067 states that the governing documents will be liberally construed in favor of the organization - not the homeowner. I've been here almost 50 years and I know that this is totally contrary to Texas law – an individual rights state. Governing documents should exist to serve homeowners, not the association.
TUPCA 83.113 – Architectural standards means a person or persons with power to approve or deny applications for proposed construction, etc. Here you have American homeowners who have bought their homes, hold responsible jobs, raise their children and TUPCA forces them to be subject to an unknown entity who will control their lives.
TUPCA 83.114 – Accumulation of Assessments. This is a booby-trap for homeowners and a boon to the greedy industry. Most homeowners are on budgets and cannot bear a sudden demand for exorbitant assessments with the alternative being foreclosure. This appears intended to overrule the Brooks case where the Supreme Court ruled 9 – 0 for homeowners. Associations don't need this power. It encourages excessive spending without accountability to the homeowners who pay the bills.
TUPCA 83.116 – Foreclosure – Obscene for an HOA to have this power. Nobody else does – not doctors or other professions – not even Enron. But TUPCA makes it worse: "A court may not set aside a sale under this section solely because the purchase price at the foreclosure sale was insufficient to fully satisfy the former owner's debt to the association."
TUPCA 83.204 – puts the burden of disclosure on the seller of the property to advise the purchaser of HOA rules and assessments. Sellers won't do this correctly. That won't protect buyers. –Buyers won't know what CAI knows. On this I agree with CAI's Dick Spears who said buyers "surrender their civil rights". He said buyers do it voluntarily. We say buyers don't know.." Do you honestly believe that Texas homeowners voluntarily surrendered their civil rights when they bought their homes?
There are major problems with Property Code 204. Our website www.HOAdata.org. shows how foreclosure lawsuits grew in Harris County alone after passage of 204. At first 204 only applied to Harris County. It's bad enough that 204 was recently expanded to adjacent counties. TUPCA would make this a truly statewide problem. TUPCA says it must be statewide. We from Harris County are here to warn all Texans that TUPCA takes away basic property rights. TUPCA means a homeowner does not own his own home. Do your constituents know what you are considering? Do your children, grandchildren, relatives and friends know that you are considering denying them their rights "in perpetuity"?
As TUPCA states – 83.012 – Uniformity of Application: – Any amendment… to limit this application to less than the entire state, e.g. population or geography is void.
For decades basic Texas law has said that deed restrictions must be clear and that limitations on the use of property are disfavored. TUPCA 83.067 has overturned this. TUPCA says the DRs don't have to be clear.
TUPCA 83.116 (a) creates the right to foreclosure even if it is not in the deed restrictions. That should violate the Texas Constitution because even Inwood and Brooks require the right to foreclose be included in the deed restrictions.
TUPCA 83.116 (b) seems to allow an association to sell your house by non-judicial foreclosure without going to court and even allows the association to buy the house at firesale prices. That creates a real incentive to trump up and boost the fees. Look at the long list of laws CAI has had enacted against the homeowner. Stop these anti-homeowner laws. Represent your constituents – the people of Texas. Do not take any portion of TUPCA. Support the Homeowner Bill of Rights.
Thank you.


NEWS PAGE HOME HOA ARTICLES


--------------------------------------------------------------------------------
Check Out the new free AIM(R) Mail -- 2 GB of storage and industry-leading spam and email virus protection.

July 28, 2008 at 1:04 PM Anonymous said...

HOA/COA --More Media "EXPRERTS," from CNN! If you all are the "EXPERTS," no wonder....

WE NEED EXPERTS AND MEDIA TO TELL THE TRUTH, NOT HIDE AND REFUSE TO REPORT ON THE REAL VICTIMS OF THESE FORECLOSURES. I BELIVE THESE "NEIGHBOR" INSTIGATED FORECLOSURES ACCOUNT FOR APPROXIMATELY 25%-30% OF THE FORECLOSURES IN THE COUNTRY! THE MEDIA ALSO NEEDS TO REPORT THE REAL POWERS MANY OF THESE GROUPS EMPLOY, AND WHAT HAPPENS TO THE INNOCENT! WHAT IS HAPPENING IN FAR TOO MANY CASES IS THE NEW DOMESTIC VIOLENCE. MOST HOMEBUYERS HAVE NO CLUE THAT THEIR ASSOCIATION and WHO KNOWS WHO, or WHAT ELSE, IS ON THEIR DEED. THEY ACTUALLY BELIEVE THEY OWN THEIR HOME!!!

You might want to talk to these two "EXPERTS," too. I BELIEVE YOU ALL HAVE A RESPONSIBILITY TO BE HONEST and FACTUAL, NO MATTER WHO IS PAYING YOU.

IF YOU DON'T CARE TO TELL THE TRUTH, HAVE CNN CONTACT SHU BARTHOLOMEW, Host, producer of www.onthecommons.us and/or one of the many advacotes in this great country!
Rep. Julio Robaina, of Florida, Jan Bergemann, www.ccfj.net...
These people will get you who you need.

Subject: CNN---ISSUE NUMBER ONE, Aired June 26, 2008 - 12:00 ET---HOA Foreclosure Question and Answers -
Gerri Willis, CNN along with
Gary Schatsky is the president of objectiveadvice.com. Greg McBride is with bankrate.com. Allan Chernoff is a CNN correspondent


Aired June 26, 2008 - 12:00 ET

http://transcripts.cnn.com/TRANSCRIPTS/0806/26/ino.01.html

Who is ADVISING::

Gary Schatsky is the president of objectiveadvice.com. Greg McBride is with bankrate.com. Allan Chernoff is a CNN correspondent and Gerry Willis, CNN Issue Number One

CALL IN QUESTION:

"Jason from Texas says: "Why are homeowners associations allowed to foreclose on a homeowner even when they are current on the mortgage and taxes? Do homeowners have any rights in this situation?"

This is like a trick question, I think -- Greg.

MCBRIDE: Well, I mean, the first thing is, the homeowner's association is actually putting a lien against the property and they're going to be in line behind the other mortgage holders. So they would have to pay off those other mortgage holders before they get any of that money back, unless you have a ton of equity in the property. They can put a lien on it, doesn't mean they're going to foreclose. I think that's pretty unlikely in a lot of markets where people don't have equity or they're upside down.

WILLIS: But don't you sign some documents when you get into a homeowners association? They have powers that you need to understand before you sign on that bottom line, right?

SCHATSKY: They absolutely have the ability to do it. And the question is whether or not they'll exercise it. Depending, as he points out, depending on what the market conditions are. You know, do they have -- you have rights. You have the right to live up to your obligations and he gave them a lien.

WILLIS: Right. Exactly. OK."


ENTIRE TRANSCRIPT:
I have ***'d area in transcript, above and below, where the HOA question/answer's (conversation) is. It is near the bottom. Do you believe this? How about the truth from all involved and how innocent, vulnerable homeowners are targeted!!!!

Transcript Providers







Return to Transcripts main page
ISSUE NUMBER ONE
Florida's Plans for Solar; Senator John McCain holds Town Hall Meeting; Midwest Farmers Look to Recover From Flood Devastation
Aired June 26, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

GERRI WILLIS, CNN ANCHOR: Minutes from now Senator John McCain will take the stage with some very strong words about his opponent, Senator Barack Obama.
New signs the U.S. economy might actually be doing better than we first thought.

Big trouble with the corn crop could mean higher food prices and why the state of Florida is finding their energy future in the sky.

Issue #1 is your economy. ISSUE #1 starts right now.

Hello, everyone, and welcome to ISSUE #1. I'm Gerri Willis. Ali Velshi will be back tomorrow.

The race for the White House is heating up today, we're standing by for a town hall meeting with John McCain starting just minutes from now in Cincinnati, Ohio. You see the location there.

There's a new report out today that shows the U.S. economy, well, it's a bit stronger than we expected. We'll tell you what it means and whether you can expect your own personal economy to get better any time soon.

The Midwest floods aren't the only threat to corn, why the crop is facing big troubles ahead and what that could mean to your grocery bills.

From the ISSUE #1 headquarters to the CNNMoney.com newsroom, we are all over the stories that matter to you. The big story today, mixed news about Issue #1. The U.S. economy not as bad as one might think, but still by no means a financial juggernaut. Today's release of the gross domestic product, that's the broadest gauge of economic health. It showed a one percent growth rate in the first three months of this year. Now, that beats the government's original estimate of 0.9 percent. And it's better than the 0.6 percent growth we saw in the last quarter of 2007.

To add prospective, analysts say a healthy economy expands at the rate of 2.5 percent to three percent. Now, this coupled with the news yesterday that the Federal Reserve will hold interest rates steady at two percent and the fact that the stock market is suffering through a rough day probably has you wondering about the state of the U.S. economy.

Greg McBride is here. He's with bankrate.com. Let's start with some of those stock market numbers. We saw the Dow tumbling more than 200 points today. It's very close to a two-year low. We're going to see some live pictures right now. The Dow down 212 points. I know people out there are thinking, ouch, you know, that's my retirement fund. That's my 401k that's going down right now. what do you tell folks to do on days like this.

GREG MCBRIDE, SENIOR FINANCIAL ANALYST: It's important to maintain a perspective. You're in this for the long haul, particularly if you're saving for retirement. And the fact is, we're going to have volatility like this for months to come because of the uncertainty regarding the economy, the ailing U.S. housing market, and the general level of the U.S. dollar. Until we get some resolution to that uncertainty, we're going to have more volatile days, we're going to more days like this.

WILLIS: And we certainly had several of them already this year. We see days where the Dow is down 300 points and more. So, we'll keep an eye on that for folks out there. But I need to get you to some other news today, it's a very busy news day today. We have some big numbers on the housing market, new home sales down 2.5 percent. We saw existing home sales rise. But just a little bit, is there any hope at all for this housing market?

MCBRIDE: Well, it's hard to say. Because the villain right now is falling home prices. I mean, home prices inched lower over the past two years. At the beginning of 2008, it's been a much steeper decline. And that's the real problem. You have foreclosures that are begetting more foreclosures. They're dragging down the comparable values of everybody's house on the street. Makes it tougher for people to sell a house even if they want to move up to something else.

WILLIS: All right. You know, obviously big problems for everyone. With those foreclosures, they continue to mount. Any quick advice for folks who have a foreclosure in their neighborhood?

MCBRIDE: Well, if you are home shopping, the biggest impediment very often is selling your own home. There are a lot of bargains out there. There are a lot of bargain hunters. You have to price realistically, and keep in mind, home prices may fall further. So be aggressive on that price now and delay the -don't delay the inevitable, you may end up having to mark down that price later anyway. Go ahead and just do it now and get it sold.

WILLIS: You know, other big news, yesterday from the Federal Reserve, interest rates - the Federal Reserve stood pat at two percent on the Fed funds rate. And you know, a lot of people saying this doesn't matter much to me. But you say that's not true.

MCBRIDE: Yes. I think this is a good thing. I mean, the fact is that the Fed has done plenty already. A lot of what we've seen in terms of oil prices going up, the dollar depreciating, a lot of that can be traced back to when the Feds started aggressively cut interest rates. The fact that they're on the sidelines is a good thing from that perspective but it also indicates the shift. They've now made it clear that inflation is public enemy number one, the likelihood is that rates are going to go up. So, as consumers, we have to position ourselves for when those rates move higher.

WILLIS: Greg McBride, great advice. He is from bankrate.com.

We're going to go live now though to Cincinnati, Ohio where presumptive Republican nominee John McCain is speaking about housing.

Let's listen in.

(JOINED IN PROGRESS)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: ...the FHA- guaranteed loan at the present value, which is unfortunately reduced of their homes so that they can make their mortgage payments, which gives them a relief from the terrible increases they continue to see sometimes as a result of a very bad mortgage that they signed, which they didn't understand and could have been eligible for one that was less cost to them to make their monthly payments.

Look, the American dream is many things. Educate our children, have a better life, there's many things that are associated with the American dream. Live in a safer world, but one of the fundamentals is the ability of Americans to own their own home. We see that continuously eroded. So we're going to have to act and act effectively. And I think that that should be in the hands of the homeowner. And we have legislation that's now winning its way through Congress. It's not exactly the proposal certainly that I had. I have some problems with it. But I'd certainly vote for it and support it because it's time that Congress started acting for you.

And I promise you as president of the United States, I will always, always put my country first above party and above every other consideration. I've had the honor of doing that since I was 17 years old and entered the United States Naval Academy. I had a choice to make many years ago. When I was allowed the opportunity, given the opportunity to return home early from prison camp. I decided against that because I knew the effect that it would have on my fellow prisoners. I put my country first. I will put my country first now and always. You can count on it.

WILLIS: All right. You've been listening to Senator John McCain in a town hall meeting in Ohio, talking about housing. Interestingly, he said he would support legislation pending in Congress. On the issue of housing, it's been fairly controversial, particularly with Republicans, he said he would do it to put his country first and the problems of the housing market first. Some interesting comments there.

But high gas prices, one of the many cost Americans struggles with in this economy. And that brings us to today's "Quick Vote" where you get to weigh in. CNNMoney's Poppy Harlow is here with us today.

What do you got, Poppy?

POPPY HARLOW, CNNMONEY.COM: Well you know, gas prices have been easing slightly over this past week or so, but well above $4 in a lot of states. So that's tough for you. It may actually be changing the way that you live. We want to hear from you.

Here's our CNNMoney.com "Quick Vote" question today: High gas prices could force me to move closer to work, car pool to work, take more public transportation, or telecommute?

Weigh in on CNNMoney.com. We'll bring you those numbers a little later in the show -- Gerri.

WILLIS: I like that. Telecommute, maybe we could do a little -

HARLOW: It would be fun. Is that okay, boss?

WILLIS: Maybe we can get a go ahead on that, maybe not. All right, Poppy. We'll see you a little later in the show.

Why location, location, location is the key to saving money after you buy the house? Why the corn crop in the Midwest might be in even bigger trouble and what that could mean to the price you pay at the grocery store. And we'll talk with the mayor of Philadelphia, Michael Nutter, about his city's attack on foreclosure. We're all over Issue #1 right here on CNN.

(COMMERCIAL BREAK)

WILLIS: All right. You are looking at live pictures of the big board there. You can see the Dow industrial's down 236 points. The cause, Goldman Sachs downgraded two very important stocks in the Dow Jones industrial average, GM and Citibank. Susan Lisovicz is going to be following this all day for us. We'll be covering this. Your bottom line is our bread and butter and we will be catching up on that every hour.

Well, it's been about a week since the historic Midwest floods were at their worst. And among the hardest hit, farmers who lost a good deal of their crop. And for the past few days, farmers have been trying to recover by planting corn and soybean. But now they're facing a new set of problems. CNN's senior correspondent Allan Chernoff is with us.

Hi, Allan.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Gerri, I was just on the phone with the director of research for the Iowa Farm Bureau. While we were talking, kaboom-kaboom, thunderstorms all over the place in Iowa right now. In fact, yesterday, some parts of Iowa got more than two inches of rain. It is coming down more right now. Obviously that is not helpful at all. The farmers have been trying to replant. They have done a good amount over the past week about 800,000 acres, mostly soybean, remember, soybean grows a little faster than corn, it's a little easier to grow. But the damage is still severe. The latest estimate in Iowa alone, corn and soybean losses of 2.2 million acres, that amounts to about $3.5 billion.

Going forward, the weather may not cooperate, as well. The forecast is for colder than normal weather next week, at night, getting down into the 50s in farm country. That's not going to help the crops grow.

(BEGIN VIDEO CLIP)

DALE MOHLER, METEOROLOGIST, ACCUWEATHER.COM; Crop got into the fields a little bit late and they need ideal warm weather to get them back on track and get them back ahead of normal. The problem we have is that if these crops grow slower, they might mature into the part of the season we could get our first frost. And the crops are going to be more vulnerable this year.

(END VIDEO CLIP)

CHERNOFF: As if that's not enough trouble, the flood waters are still causing a very tough situation along the Mississippi. By tomorrow the army corps of engineers is hoping to reopen locks on the Mississippi down to Keokuk, Iowa. That's the green portion over there from Davenport down onto Keokuk. But below there, south to St. Louis remains shut. It will remain shut even after tomorrow. That means grain from last year's harvest still cannot get to ships waiting in New Orleans for export.

WILLIS: Well, Allan, boy, those farmers, they cannot catch a break. If it's not one thing, it's another. How are they going to survive this financial squeeze?

CHERNOFF: Yes, this is a real problem here. Because a lot of the farmers depend on exporting last year's harvest. They need the money now to pay for all of the corn, soybean that they've planted, to pay for all of the fertilizer, and to pay, Gerri, for their new farm equipment. We met a farmer just last week who bought this massive tractor, expecting to have a record harvest this year. The tractor cost him $120,000.

WILLIS: And you think your Prius is expensive.

All right. Allan, thank you for that report. And thank you so much for your reporting from the field. That was outstanding. Thank you.

CHERNOFF: Thank you.

WILLIS: We talked a lot about the impact of housing in the flood zone. And of course, farming, but one of the industries suffering right now, railroads.

CNN's Susan Roesgen live right now in Waterloo, Iowa with more. Hi there, Susan.

(BEGIN VIDEOTAPE)

SUSAN ROESGEN, CNN CORRESPONDENT (voice-over): The Iowa Northern Railway moves 65 million bushels of grain each year down these tracks. But very little is going anywhere this week. These rail cars are filled with corn that can't be moved.

There's nothing wrong with this train, but this is where it's stuck. This Iowa Northern Railway train has been here for two weeks now because it can't go anywhere. The tracks are washed out in both directions. What kind of force does that?

UNIDENTIFIED MALE: Lots of force. Lots of force.

ROESGEN: This is the Iowa Northern Railway, it's 165 miles long. That's not a huge distance, but when the flood destroyed two key bridges and water lapped over the tracks, millions of dollars in freight stopped moving. Dan Sabin's family owns the company.

DANIEL SABIN, PRES. IOWA NORTHERN RAILWAY: Josh came running into my office. And he was visibly upset. And he didn't have to tell me what happened. I knew exactly what he was going to say that the bridge is gone. And you know, you work so hard to try to bring in your $50 or $60,000 a day in revenue and then to realize it's going to cost you millions of dollars just to recover kind of your baseline. It's a hard emotion to get through.

ROESGEN: The railway has lost 80 percent of its business. That also hurts all the companies that rely on this railway to ship their products. And ultimately, it could cost us more when we buy them. According to the Association of American Railroads, more than 40 percent of all freights shipped in this country goes by rail. And the floods this month have wiped out parts of several railways in five states. Insurance, nope, no flood insurance. Federal help? Maybe, but not yet.

SABIN: If we don't see some sort of opportunity, get at least some low-interest loans from the Federal Railroad Administration or something through Congress, it'll probably kill the company.

ROESGEN: The company is trying to repair the tracks as quickly as possible, but it may not be back in full operation for another six months. A long and costly delay.

(END VIDEOTAPE)

ROESGEN: And we are here today in Waterloo, Iowa with the Waterloo, Iowa Bridge still out behind me. Nothing the railway company can do about that. But in trying to get around the bridge that's out in Cedar Rapids, Gerri, they are now making a 200-mile detour.

WILLIS: Wow, Susan, tough times out there. You know, besides the corn stuck on the track there, what other things have been held up?

ROESGEN: Well, John Deere tractors, for one thing. Gerri, this company is the number one shipper for the John Deere tractors that have the headquarters not far from here. Those tractors are sent to places all around the world. Also soybean, some of that, some oats for the Quaker Oats factory. But also Tyson frozen pork. When this flood happened and these bridges were wiped out, yes, tons of Tyson frozen pork bound for Japan. The company had to try to keep that pork from thawing so they could get it there.

WILLIS: Tough times. Susan, thank you for that.

Folks in Florida are looking up to the sky to solve the future of energy in that state. We'll explain, plus we'll take you to the city of brotherly love, taking an aggressive approach to solving the mortgage meltdown. And for the latest issue #1 news anytime, make sure you log on to CNNMoney.com. Logon, right now. Check it out.

(COMMERCIAL BREAK)

WILLIS: Welcome back. The rise and fall of America's housing market, prices are down. But with the decline comes a slight up tick in existing home sales. The National Association of Realtors reports sales of single family homes and condos rose by two percent in May. It's only the second time in 10 months that's happened. But don't read too much into it, economists they say home prices will continue a downward trend before the housing segment as a whole improves.

Now with the foreclosure crisis affecting nearly every state, many city leaders are taking matters into their own hands.

Earlier this week, I talked with Philadelphia Mayor Michael Nutter.

(BEGIN VIDEOTAPE)

WILLIS: You put in some really aggressive approaches in your city. But I want to show folks, first, some numbers, one in almost 1,200 homes in your city in foreclosure. What are you doing there to ease this problem?

MAYOR MICHAEL NUTTER, PHILADELPHIA: Well, we've taken a number of steps. As you mentioned somewhat aggressive, 6,200 mortgage foreclosures in 2007. That was an 18 percent increase over 2006. We're looking at possibly 8,500 in this current year. So we came up with the Philadelphia Mortgage Foreclosure Protection Plan. It's a bit of a mouthful. But it has a number of components to it.

A hot line for people to call to get help, more funding to support housing counseling services as well as reconciliation meetings with lawyers that each homeowner would have a lawyer. We're putting teams out in the street, literally going door to door to talk to folks about these issues. We've stopped sheriff sales back in March. They won't start back up until July.

WILLIS: Let's drill it down in some of these because I think they're so interesting. You have actually got your sheriff signed on board to help out with this. Now, this is really unusual. How did you make that happen?

NUTTER: Absolutely.

WILLIS: And what is the sheriff doing?

NUTTER: Well, that came as a result of conversations both with city council and myself to talk with the sheriff about the challenging situation. Look, the sheriff's of Philadelphia, as well. And he certainly understands that just throwing people out in the street doesn't do any of us any good.

WILLIS: What is the impact in the neighborhoods on the street where foreclosures have gone through the roof? What happened?

NUTTER: Well, what happens, the neighborhoods become destabilized, we see increases in our social service costs, people literally end up either in our homeless population or in our shelter systems. The property values of the adjoining properties, they start to decline. It is a downward spiral ripple effect all throughout the community. So what we said is we have to come in, stop it, stabilize it, and then revitalize these communities. Our goal is to keep people in their homes with the ability to pay a mortgage payment that they can actually afford.

WILLIS: Well, I think that's everybody's goal across the country. But you had that complication, a previous mayor John Street, actually put in place a program, which frankly, hasn't been helping you - an effort to try to get those delinquent real estate taxes. Tell me how that's impeded your efforts? And what you're doing about it?

NUTTER: Everyone recognizes that, look, let's have a heart and recognize that keeping families in their home, working out payment arrangements, treating people in a decent fashion and getting ahead of the problem, this is really about prevention. More than just waiting until someone shows up at the door. So it's been a tremendously cooperative process. We're very proud of it.

WILLIS: Since I've got you here, I want you to grade the federal efforts to solve this issue we've had hope now, we've had any number of programs out of the federal government, the FHA, HUD, you name it, is it working?

NUTTER: I think they've been less than adequate. They're probably in the C minus, maybe even a D category. The federal government on so many issues, unfortunately, has left cities and citizens literally holding a bag. And they could replicate, if not exponentially take forward the kind of program that we've put forward here just in Philadelphia. And I'm sure other cities are trying to come up with programs. Once again, the federal government is almost nowhere to be found. It really needs to be our partner in this.

(END VIDEOTAPE)

WILLIS: That was Philadelphia Mayor Michael Nutter.

Coming up, the quest to become less energy dependent. Some folks in Florida think they have it all figured out. We'll tell you how they're doing.

Plus, location, location, location, important when you buy a home. And it could save you money in the long run. We'll explain coming up next.

You're watching the home of ISSUE #1 the economy, CNN.

(COMMERCIAL BREAK)

WILLIS: This just in to CNN, the AFL-CIL has voted to endorse Senator Barack Obama for president. No big surprise here, but the union endorsement is always helpful given their 13 million members. More coming up on that in the CNN NEWSROOM.

We're not the only ones looking for solutions to increase our own oil supply, China, the world's second biggest oil consumer, is desperate for oil. Looking to Latin America as a possible supplier, but that could have an effect on consumers right here in the United States. CNN's John Vause explains.

(BEGIN VIDEOTAPE)

JOHN VAUSE, CNN CORRESPONDENT: This is one reason why China is desperate for oil. Long lines of trucks waiting for hours to fill up with diesel. It's been like this since April, this driver told me, and sometimes it's rationed. Just enough for 45 miles. The cost of diesel and regular gas is capped here by the government. But with the cost of crude sky high, state-owned oil companies have been taking huge losses and in turn, have reduced supply. The government raised the cost of gasoline by almost 20 percent, but China, the world's second biggest consumer of oil needs more. A lot more, and it's looking everywhere, including America's backyard.

To Venezuela's president, Hugo Chavez, China is a way out of an unhappy relationship with the U.S.. Despite all of his anti-American rant, Chavez is still dependent on the U.S. which buys more than half his country's oil.

TOM WALLIN, ENERGY INTELLIGENCE GROUP: The U.S. has the most sophisticated refining system in the world and Venezuela has relatively heavy, difficult to refine crude and so the natural market for Venezuelan crude is the United States.

VAUSE: But last month Venezuela and China agreed to build a refinery in southern China to specifically process Venezuela's heavy oil, part of the plan to dramatically increase oil exports to China from 80,000 barrels per day to 1 million barrels per day within three years. Amount the same amount of crude sold to the U.S. Chinese state-owned oil companies are striking deals across Latin America. In Brazil, Chile, Peru and Argentina.

UNIDENTIFIED MALE: For American oil companies and for other western oil companies, the Chinese are turning out to be a significant competitor.

VAUSE: And analysts say that's not necessarily a bad thing. China is investing heavily in exploration and that might ultimately increase supply.

John Vause, CNN, Beijing.

(END VIDEOTAPE)

WILLIS: Next, creating your own energy. Some folks in Florida are doing just that. We'll tell you how and how much money they're saving.

But first, let's get you up to speed on the latest headlines. Don Lemon is in the "CNN NEWSROOM."

Hi there, Don.

DON LEMON, CNN ANCHOR: Hi, Gerri. Good to see you.

I want to talk about a landmark ruling from the Supreme Court today regarding your right to own a gun. The high court struck down a sweeping handgun ban in the nation's capital in a sharply divided five to four ruling. The court said the D.C. handgun ban violates America's constitutional right to keep and bear arms. The ban was one of the strictest gun control laws in the country. Well, today's ruling settles a decade-long debate over whether gun ownership is an individual right.

North Korea. Has a nuclear stalemate been diffused? Well just hours ago, the communist nation announced that it has handed over long awaited details of its nuclear program. That's a critical step toward dismantling it. President Bush says he'll call for the lifting of sanctions against the nation he once called part of the axis of evil. He will also move to take it off the U.S. terror list. But, he adds, North Korea will have to end its nuclear activities in a verifiable way.

Firefighters are facing another grueling day in the western U.S. Hundreds of wildfires are still burning across tens of thousands of acres in Arizona, New Mexico, and also California. One wildfire is closing in on Big Surve (ph). Firefighters across the region are hoping for cooler temperatures and higher humidity. Wow, let's hope they get it.

More of those stories at the top of the hour right here in the CNN "Newsroom." Plus we'll have this for you. A music star muscles to the rescue of a fan. We'll show you the video of an incident at the country superstar Tim McGraw's concert. It's really unbelievable stuff.

I'm Don Lemon. I'm going to see you at the top of the hour. I'm going to throw it back to New York and Gerri Willis.

Gerri, it was great seeing you down here yesterday and hanging out with you right next to me in the desk sitting next to me.

WILLIS: Well, it was great visiting with you too. I always enjoy being in Atlanta.

Thank you, Don Lemon.

LEMON: All right, Gerri.

WILLIS: With gas prices rising, a growing number of Americans are parking their cars permanently. And that's where car sharing programs can come in. CNNMoney.com's Poppy Harlow has our "Energy Fix." Hey there, Poppy.

HARLOW: Hey there, Gerri.

Well, folks, it's an energy fix for a lot of people who are already using car sharing. It allows you to rent a vehicle by the hour and, get this, gas is usually included. It's becoming a more attractive option and new companies are popping up all over the country when the price of gas tops $4 in 30 states across America.

Now there are non-profit car sharing programs in Philadelphia, Chicago, Minneapolis and San Francisco. And then there's Zipcar, that's a national for-profit chain. Now those companies say it's not just gas that you're saving on. There's also insurance and repair costs. Ithica (ph) Car Share in New York, that's another non-profit, says it costs an average of $650 a month to own a car. So I spoke with the CEO of Zipcar and he says his company is also helping get some of those cars off the road.

(BEGIN VIDEO CLIP)

SCOTT GRIFFITH, CHAIRMAN AND CEO, ZIPCAR: What we find is about 40 percent of the people that join either don't buy a car or they sell a car because of Zipcar. So for every car we put on, that translates into 15 personal cars going away.

(END VIDEO CLIP)

HARLOW: Now saving money and helping the environment is good. But make no mistake, these companies are growing right along with the price of fuel. In fact, Gerri, you know, Zipcar contributes about 15 percent of its growth to the rising fuel costs.

WILLIS: Well, interesting story. You know, you see the Zipcars here in Manhattan all the time. But if Zipcar is paying for the gas, doesn't it mean it's hurting their bottom line?

HARLOW: Yes, of course, high gas prices are kind of a double- edged sword here, folks, for those car sharing companies. On the one hand, it's stoking (ph) demand. On the other hand, the companies are paying the same high gas price that we are all. So Zipcar is finding some ways to cope. Take a listen.

(BEGIN VIDEO CLIP)

GRIFFITH: We had to put a price increase in earlier this year, about a 5 percent or 6 percent price increase. That's covered us for now. If we see another big spike above where we are today, you know, we'll have to do that.

(END VIDEO CLIP)

HARLOW: You'll have to do the calculation, of course, for yourself to see if this is really an energy fix for you. And remember, car-sharing programs, folks, are not in every community. But we have a closer look at some people, Gerri, who are ditching their cars, literally. It's on our Web site, CNNMoney.com.

WILLIS: I definitely want to see that.

Poppy, thank you for that.

Well, near-record gas prices have so many of us trying to figure out how to save money. More and more folks in the state of Florida are tapping into one natural resource that's more abundant than probably anything else, and that's sunshine.

CNN's Susan Candiotti explains.

(BEGIN VIDEOTAPE)

SUSAN CANDIOTTI, CNN CORRESPONDENT, (voice over): No wonder Florida's called the sunshine state. But there are more practical uses for Florida sunshine. Jessie Prado plastered his roof with two dozen solar panels and his electric bill has nose dived.

JESSE PRADO, HOMEOWNER: My bill last month was $6.86.

CANDIOTTI: $6.

PRADO: And 86 cents.

CANDIOTTI: Prado is one of a rare but growing number of Floridians tapping into solar power. Now the state's largest utility, Florida Power and Light, is laying out an ambitious plan to harness Florida's sun. It predicts in the next 30 years . . .

ERIC SILAGY, FPL VP DEVELOPMENT: The amount of CO2 that it will offset is over 3.5 million tons. So it's a tremendous -- which is the equivalent of 25,000 cars a year being taken off the road.

CANDIOTTI: Despite Florida's abundant sunshine, it cannot compete with California's Mojave Desert, where the sun is much stronger. FPL has a huge solar plant there too. Blame it on Florida's humidity.

ROBERT REEDY, UNIVERSITY OF CENTRAL FLORIDA: That moisture in the air causes the light to scatter, so that when it reaches your collector, it's not as easy to focus.

CANDIOTTI: And unlike homeowner Jesse Prado, who uses batteries at night to store solar energy, power companies cannot.

SILAGY: The only way to really efficiently store power on a small scale is through batteries, large batteries. But to do so on a large scale, it's just not technically feasible and very, very expensive.

CANDIOTTI: So panels can only work during the day. At night, this Florida power plant will still have to use old-fashioned and expensive fossil fuels. Jessie Prado plans one day to be energy independent. PRADO: That it will pay itself off probably seven years. Seven to 12 years depending on how much you've invested into it. But then after that, you don't have to pay for power anymore.

CANDIOTTI: A house this size, about 1,600 square feet, can cost about $40,000 to convert to solar power, including all those panels on the roof. But with state and federal rebates, the out of pocket costs can be cut in half.

Susan Candiotti, CNN, Boca Raton, Florida.

(END VIDEOTAPE)

STEPHANOPOULOS: All right. Well the price of your home isn't the only cost you should take into account when buying it. Why location, location, location could make all the difference to your bottom line.

And we're going to talk about some of the issues that are most important to you. E-mail the Help Desk, issue1@cnn.com. They want your questions.

(COMMERCIAL BREAK)

WILLIS: You're looking at live pictures of the big board. You can see the Dow Industrial's down, ouch, 252 points right now. Been falling all morning long ever since Goldman Sachs downgraded two major Dow components. One Citigroup. The other, GM And, of course, we will continue to follow this story for you all day long. Susan Lisovicz is watching this intently a making work (ph) just about every half hour, 30 minutes, and she will follow that for us.

Also, the high cost of gas is exploding family budgets across the country. And our next guest says where you live could make a big difference in how much it's impacting you.

John Norquist is the president of the Congress for New Urbanism. He's joining us now from Chicago.

John, great to see you.

JOHN NORQUIST, PRESIDENT, CONGRESS FOR THE NEW URBANISM: Hi, Gerri. Great to be with you.

WILLIS: Now I know everybody considers, location, location, location when they buy a house. But you say you need to think about it in a different way. How so?

NORQUIST: Well, the whole real estate market is repricing itself based on location efficiency. With gas at about $4.50 a gallon, people are noticing that the longer commutes are now degrading the value of places where there's long commutes. And where it's more convenient, there's that premium.

And it's been true for sometime. About two or three years ago this trend started to show up where the preference for either cities or older suburbs where the location is more efficient.

WILLIS: All right. Well, I want to show our viewers an example of what's going on here. We're going to tell you a tale of two suburbs, really. Two suburbs of Atlanta, Decatur and Dacula. One is about six miles from Atlanta. The other is about 38 miles from Atlanta. You can see on the map here where they're all located. Obviously, Decatur much closer in.

What did you find here, John? What's the story here? Take a look at these numbers. Miles traveled, very different here. Transportation costs for a month, whoa, a very big difference, right?

NORQUIST: Right. And it's even gotten bigger since this calculation was done because the gas prices continue to go up. You save a lot of money on transportation if you live in Decatur as opposed to Dacula. And the housing market's now repricing itself to reflect that. There's a consumer preference to live where you can save money on transportation.

So for investors, for the big real estate investors, they're starting to look at sprawl as the number one risk factor for the average person. There's no reason why they shouldn't have this information too. If you want to look at location efficiency, you want to look at the commute you're going to have and the money you're going to spend on gas and calculate that in to the house price that you pay.

WILLIS: I think that makes all the sense in the world. You actually have a tool to help folks do that. It's called the Housing and Transportation Affordability Index, htaindex.com. We wanted to show our viewers an example of this. We're going to use Raleigh Durham Chapel Hill. The research triangle in North Carolina, as an example here, just to give people an idea of what all this looks like.

If you look at housing costs, for example, they should be about 30 percent of your costs. And if you look at this map, you'll see the yellow equals the affordable areas when you talk about housing costs. Now, let's layer on transportation costs on top of that. You'll see things become a whole lot less affordable and we're assuming that transportation costs should be 48 percent of your monthly budget or less.

Now, John, talk to me a little bit about the trend here. You can see the inner city, obviously, the most affordable. But, boy, you start getting outside that inner ring and, whoo, the prices jump.

NORQUIST: Yes. I mean you might get a lower price on a house, but then you have to factor in what it's going to cost you to drive. And your viewers can go to cnu.org/locationefficiency and make their own calculation for wherever they live. And ask themselves this question. You know, what is the real value of the place I'm about to invest. For most people, the house is the biggest investment they make. And so you want to do that carefully and you want to look at this. And with gas prices going way up, it's more important to do it than ever.

WILLIS: Well, John, we appreciate your help today. Thanks for your time.

NORQUIST: My pleasure.

WILLIS: Coming up next, it's time to get some answers. The CNN Help Desk is standing by to get you solutions to your money questions.

And could high gas prices force big changes in your life? It's not too late to weigh in. Log on to CNNMoney.com and cast your vote.

You're watching ISSUE #1.

(COMMERCIAL BREAK)

WILLIS: We are at ISSUE #1. We want to help you with your money problem, get you out of debt, save you some real cash. It's time for the Help Desk. Let's get right down to it.

Gary Schatsky is the president of objectiveadvice.com. Greg McBride is with bankrate.com. Allan Chernoff is a CNN correspondent.

Welcome all.

All right. Let's get that first e-mail in. Lennox asks: "As a long-term investment, which is better: U.S. savings bonds, money markets, or CDs?"

I have to spread the wealth around on this one. Greg, why don't you start because you're so interested in these kinds of investments.

MCBRIDE: Well, as a long-term investment, none of the three are particularly attractive because you have to stay ahead of inflation. But the best of the lot, high yielding CDs. If you're seeking out the best return on CDs, that's going to keep you ahead of inflation. And you can tailor it to your time horizon. Another possibility, TIPS, Treasury Inflation Protected Securities. They're designed to give you a constant buffer against inflation.

GARY SCHATSKY, PRESIDENT, OBJECTIVEADVICE.COM: The key thing with the CDs is, you want to make sure you're not going out too far because if inflation picks up, you might find yourself locked into a rate you'll be sidedly (ph) unhappy with a year or two down the road.

WILLIS: You've got to invest in stocks bottom line if you're looking at the long term, right, guys?

MCBRIDE (ph): Has to be part of the portfolio.

WILLIS: OK.

CHERNOFF: It should be, but this viewer is looking at days, like today, the Dow off 250 points and saying, I want security. So if you want security, go to the Treasury. That's the safest thing you can possibly buy.

WILLIS: Except . . .

CHERNOFF: Buy a 10-year note.

WILLIS: Your return gets killed by inflation, Allan, right? I mean come on, guys?

MCBRIDE: Over the long-term, inflation is going to do more damage to your portfolio than market volatility. Over the long-term.

CHERNOFF: Oh, yes, I totally agree. Stocks definitely -- that is the place for most people longer term, but some people just can't handle it. If you can't handle it . . .

SCHATSKY: You have the credit risk tolerance. If people can't sleep at night, it doesn't mean you follow them completely, but you have to credit it when you're allocating a portfolio. If you're not going to sleep at night, you should have a more conservative portfolio.

WILLIS: People never know what their risk tolerance is. Great discussion. OK. Well let's move on.

Jim asks: "is there an IRA/401(k) type vehicle that lets you buy a house as an investment and then move in later? I want to buy retirement property in Hawaii and move there in 10 years."

Allan.

CHERNOFF: You can borrow $10,000 out of your IRA to buy a home for the first time. Or if you hadn't had a home for two years, you can go ahead and do that. However, you're going to be taxed on that $10,000. It's really not the ideal way to do it.

WILLIS: Yes, I would rather take it out of some kind of other savings somewhere.

SCHATSKY: But you can't have a -- there can be a trustee buying real estate but people are not moving into that very same property. And most real estate, if you're buying it as an investment, you want the depreciation, you want to be able to take advantage of some of the tax advantages, which you couldn't do in a retirement account in any event.

WILLIS: OK. All right. Good advice.

********************************

Jason from Texas says: "Why are homeowners associations allowed to foreclose on a homeowner even when they are current on the mortgage and taxes? Do homeowners have any rights in this situation?"

This is like a trick question, I think -- Greg.

MCBRIDE: Well, I mean, the first thing is, the homeowner's association is actually putting a lien against the property and they're going to be in line behind the other mortgage holders. So they would have to pay off those other mortgage holders before they get any of that money back, unless you have a ton of equity in the property. They can put a lien on it, doesn't mean they're going to foreclose. I think that's pretty unlikely in a lot of markets where people don't have equity or they're upside down.

WILLIS: But don't you sign some documents when you get into a homeowners association? They have powers that you need to understand before you sign on that bottom line, right?

SCHATSKY: They absolutely have the ability to do it. And the question is whether or not they'll exercise it. Depending, as he points out, depending on what the market conditions are. You know, do they have -- you have rights. You have the right to live up to your obligations and he gave them a lien.

WILLIS: Right. Exactly. OK.

********************
Jamie in Florida asks: "The bank has started foreclosure proceedings on my investment property. The tenant is aware of it and is refusing to pay rent. Do I still have the right to collect rent?"

SCHATSKY: Absolutely. I mean you have the right to collect rent as long as you own the property. People are trying to play fast and loose saying, oh, you're going to lose the property, maybe you won't chase me for the money. You can certainly sue them for the rent. You can sue them for the rent even after they leave. And --

WILLIS: Hope you get it back, right?

SCHATSKY: Yes, hope you do.

WILLIS: That's a tough situation.

Kishore in Florida asks: "I am about to graduate from college and have a good amount of capital built up. Should I drop the cash into a masters program now or take a few years to invest in real estate or start a small business?"

Lots of options on the table here.

CHERNOFF: You know what she needs to do? Kishore needs to decide what she wants to do with her life.

WILLIS: Right.

CHERNOFF: That's really the thing to do.

WILLIS: Right. Exactly. Guys?

MCBRIDE: Well, sinking the money into a business, not a short- term venture, you have to have a longer term view. And if she's looking at a quick turnaround, that's not the way to go.

WILLIS: All right. Well, guys, great conversation. Love to hear the debate.

Gary Schatsky, Greg McBride, Allan Chernoff, thanks to all of you.

You will definitely want to join us tomorrow on ISSUE #1. We're going to open up the CNN phone lines to you, taking your calls live on the program. So get your questions ready. We want to hear from you.

Why an addition to the Brooklyn Bridge is a cash cow for New York City.

Plus, it's not too late to vote. After all, it is your right. What could high gas prices force you to do. Log on to CNNMoney.com and be heard.

We're all over issue number one right here on CNN.

(COMMERCIAL BREAK)

WILLIS: Welcome back to ISSUE #1.

Americans, well, we love our cars. But apparently a little less these days. For the first time in five years, drivers of new vehicles say they're less satisfied with their ride. The annual J.D. Powers Automotive Performance Survey, it was released today, shows owner satisfaction declined by 2 percent from last year.

What changed? Well you know what changed, gas prices. According to J.D. Power, fuel economy stayed unchanged with an industry average of 21 mile per gallon. Foreign cars led the way with Porsche in front of the pack. But American made cars made some inroads. The eight most improved name plates all were U.S. brands.

Well, what could high gas prices force you to do? That's today's Quick Vote question. For how you voted, let's go back to Poppy Harlow.

Hi, Poppy.

HARLOW: Hey, Gerri.

Well, people out there are certainly changing their habits in terms of getting to work. A majority of you said you would telecommute. Thirty-two percent there. Twenty-eight percent say they'd take more public transportation, like a lot of us do here in New York. And 20 percent said they'll move closer to work or car pool to work. And I think Gerri and I might start a petition to telecommute.

WILLIS: I know. We need the heartsdale (ph) . . .

HARLOW: From our home.

WILLIS: Yes, that heartsdale bureau. Nobody goes for that.

All right. Well, thank you, Poppy, for that.

HARLOW: Sure.

WILLIS: Lots of buzz in New York today about this summer's monumental public art project. The New York City waterfalls. Four, man-made water falls are flowing right now in New York City, each towering nearly 12 stories. Now one of those waterfalls is underneath the Brooklyn Bridge and that's where we find our Rob Marciano.

(BEGIN VIDEOTAPE)

ROB MARCIANO, CNN CORRESPONDENT: Earlier this morning, on the shores of the lower east side of Manhattan, a public display of art unveiled. And it's quite unique. Check it out. It's just over my left shoulder. This, the Brooklyn Bridge, which is 125 years old this year, but I don't think the designers had this in mind.

That is a waterfall cascading water that's drawn from the East River, pumped up on top of that scaffolding there. It's one of four that align both shores of the river down here in the lower east side. Some as high as 120 feet high. So one of these is actually higher than the Statue of Liberty.

It's another example of where a public display of art is actually being used to help draw some tourism into New York City. They spent about $15 million, privately donated funds, to build these waterfalls. And the mayor says he's hoping to get about $50 million to $55 million back from tourism.

And you walk down the streets of Manhattan, don't have to tell you this, you can't walk a block without hearing some foreign language spoken. With the weak dollar, tourism dollars from overseas are pouring into Manhattan. This was one way they expect to recoup some of that.

Environmental concerns,. Fishy are OK. They use some filters to protect them. And they're offsetting some of the costs from the energy that they're using by buying wind credits in order to make this as green friendly a project as possible. And on top of that, it could be pretty romantic, even in the rain. It'll be open until October 13th. May want to come down and check it out.

Gerri, back to you.

(END VIDEOTAPE)

WILLIS: Well, interesting stuff. I wonder how much energy we're expending to make all of that work. Well, it is pretty anyway.

For more ideas, strategies and tips to save you money and protect your house, watch "Open House," Saturday, 9:30 a.m. Eastern, right here on CNN. And for more on how the news of the week affects your wallet, tune into "Your Money," Saturdays at 1:00 p.m. Eastern and Sundays at 3:00, right here on CNN.

The economy is issue number one and we here at CNN, we're committed to covering it for you. ISSUE #1 will be back here tomorrow, same time, 12:00 p.m. Eastern, right here on CNN.

It's time now to get you up to speed on other stories making headlines. "CNN NEWSROOM" with Don Lemon and Brianna Keilar starts right now.




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October 9, 2011 at 3:43 PM Anonymous said...

Restrictive Covenants are hidden in the abck of the abstract of title here in Alabama. That contains the HOA. The Home owners Association is developed by developers only as a source of revenue while the complete and beyond their project. It is simply a cash cow they skim money from for there own personal gain. Anyone knowing that HOA are a good ideal should have their head examined. If you wish to buy groceries for your neingbors all the time, then go ahead, as they is what your doing in an association. Giving your fees to the developer that built the project. Common areas were create for just that purpose. It is a grredy scam that needs to stop. Leave it for the condos and Townhomes, not single familes. They are turning single family homes into Ghetto Projects that won't be worth the money you paid for them. Expect to lose about 50%!

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