Sacramento Bee article "Couple's Plight Raises Questions" distorts the picture

April 18, 2004

By AHRC News Services
Copyright AHRC News Services

Michael Kolber's article - "Couple's Plight Raises Questions" (Sacramento Bee, April 18, 2004) - simply misses the point - and presents a very distorted picture as a result.

The article explores the question why the foreclosure auction took place at all. The original debt of the Radcliffs' was only $120. At the time of the auction, it had risen to $2,047.40. That was the minimum bid. As the house was worth approximately $289,000, there were many bidders. It sold for $70,000.

The article asks why didn't the Radcliffs did not pay off the alleged debt and then sue, or at worst, declare bankruptcy. The article then quotes Grant Nelson, a UCLA law professor specializing in real estate finance who declares that such foreclosures only happen "where people don't act rationally." Michael Kolber concurs: "A touch of irrational behavior."

What is irrational here is that there are laws that allow such foreclosures. Or maybe it is rational if you think that legislation should be made by special interest groups such as CAI, who had key legislators in their grubby little hands.

But, of course, that is not rational. A country cannot long survive when key legislation is made in whole or in part by a few who stand to reap millions at the expense of the millions. All around us, we see the crumbling of the essential infrastructure of the country because of this modus operandi. The bigger threat to the country is not the external terrorists, but those internal terrorists who devour the fundamental lifeblood of the country.

Community Association Institute (CAI)lawyers and their minions are one such group. They were the ones who got the non-judicial foreclosure provision included in the Davis Stirling Act. They had no problem doing this because their former national president, Katherine Rosenberry, was the one entrusted with writing the bill by Gray Davis and Larry Stirling. (Davis is gone, but Stirling is the republican candidate for the 39th district to the California Senate in the upcoming November election.)

Is a homeowner association going to go bankrupt because of an unpaid $120 bill? Clearly no.

"But what if everybody started to do it?" asks the homeowner association. The response is simple. The overwhelming majority of homeowners pay their assessments in full and on time. Of the remaining few, only a handful are deadbeats - and these can be dealt with through small claims court. The percentage that would be collection proof is minuscle.

Hence, why allow CAI lawyers the massive power of non-judicial foreclosure? The reason is simple. Because they make a lot of money off it. One lawyer, Larry Rothman, boasted that he filed 250 liens a month. If his average fee for doing this was $3,000 each, you can do the math. Court records shows that the law firm of Peters and Freedman, operating primarily in San Diego, Orange and Riverside counties on behalf of homeowner associations have filed thousands of notices of sale on association homes. To get some idea of how lucrative this is, David Peters of that law firm owns a home in Rancho Santa Fe worth over $4 million.

Kolber's article quotes the recommendation of the National Conference of Commissioners on Uniform State Laws. It recommends that foreclosures be allowed to occur with brokers and financed purchases. Allegedly, "That would ensure sales closer to market value and more protection of equity for homeowners, while still guaranteeing that dues are paid."

First of all, Mr. Kobler should let the public know that this organization is a private one, not public. Second, he should let the public know that it is riddled with special interests. In this case, brokers and lenders would get substantial business if this proposal became law.

Indeed, Mr.Kolber's article is basically lacking any input from homeowners at the grassroots level. The closest he comes is a quote from a Consumers Union attorney that homeowners lose their homes "because they don't understand the process."

But that is not the fundamental reality driving foreclosures. The real reason is that foreclosures are a giant honey pot for so many - lawyers, managers, investors, real estate agents, title companies etc.

Until that day comes when non-judicial foreclosure is banned from the homes owned by 50 million Americans in homeowner associations, the country will continue to bleed the life blood out its fundamental institution - the home. Reporters would better serve the country if they contacted real homeowners, rather than those who profit so handsomely from the honey pot.