Vice President of HOA Division of large commercial bank misrepresents effect of AB2598 in CAI press release dated August 28, 2004

September 08, 2004

By Alex Lyte
Copyright Lyte Publishing Group

John Smith, Senior Vice President of U.S. Bank Homeowner Division is quoted by Perry Communications in an August 28, 2004 press release as follows:

" We have thousands of community associations in California as clients. This law will have a negative impact on the ability of associations to secure financing for needed renovations and repairs."

This is a farce. Mr. Smith, U.S. Bank and Perry Communications have no right to use false and misleading written representations in order to attempt to lend credibility to preserving the right of CAI lawyers to steal homes through non-judicial foreclosure.

These patently misleading and inaccurate written representations by U.S. Bank are cleverly orchestrated into a schmaltzy one-page cheezy press release by Perry Communications as part of their $30,000 campaign to defeat AB 2598.

But read on, there's more...

Whether or not non-judicial foreclosure remains on the books, perhaps Mr. Smith (U.S. Bank) would explain to all of us lowly CID owners, why any properly run, managed and maintained common interest development would ever need to borrow money for "needed renovations and repairs". Isn't that the purpose of reserve funds and special assessments?

Meaning, if CAI is doing its job, and its CAI managers and CAI lawyers are doing their job, and the CAI Association is doing its job, and if the BOARD is relying on all of this CAI "expertise" regarding the proper, diligent planning for maintenance and repairs and future funding then there should be sufficient available funds for each anticipated repair as scheduled in the reserve study schedule - right???

If this is true, why would any "community" (CID/HOA) ever have to ask U.S. Bank for a loan for repairs and renovations?

Or, is Mr. Smith inadvertently, along with Perry Communications, showing a card here, to all of us, and accidently revealing that all is not well in the land of "communities" because "1,000's" of them are broke or seriously under-funded and need to take out loans because insufficient funds are in the reserve for maintenance and repairs due to CAI vendor negligence?

Nice try Mr. Smith, but perhaps you might be asking yourself and your CID/HOA clients why they are broke and having to ask U.S. Bank to bail them out of trouble - by pledging as collateral the same HOA assessments that CAI lawyers are so eagerly striving to use non-judicial foreclosure to collect.

And, Mr. Smith, perhaps you might want to re-evaluate your inappropriate endorsement of CAI and its desires to keep its tentacles around the neck (lifeblood) of California's CID's.

Some people say and believe that many of your "1,000 community associations in California" are in financial trouble and that's why they are borrowing money like mad.

Are deposit holders informed of these risky, enron-like lending practices which U.S. Bank and others appear and are believed to be engaged in - making massive loans to under-funded and insolvent "communities" who suffer from deferred maintenance and neglect - which can only be paid for with a collateralized loan against future HOA assessments?

Is this type of risky, house-of-cards type of loan made even possible without non-judicial foreclosure to ensure repayment?

Some people say that this appears to be just more of the same clever CAI racket & scheme conduct which we all have come to know and expect from CAI.

These loans to insolvent and under-funded homeowner associations can only be obtained from U.S. Bank and other lenders by the homeowner associations giving a collateral interest in the monthly assessment payments, in order to guarantee repayment of the loan.

Wait just a minute, could it be that this is the accurate and true reason that Mr. Smith and U.S. Bank are inappropriately involving themselves in the effort to pressure the Governor into not signing this consumer-oriented, pro-homeowner legislation (AB 2598)?

Since many, if not most, of these same "community association's", and / or their "expert" vendors are CAI members, how could this financial disarray have been permitted to come about?

An example of one such INSOLVENT "community association" is located in the Coachella Valley (Palm Desert - Palm Springs area) which U.S. Bank provided a $ 500,000 loan to for "re-roofing". The CAI manager and CAI lawyer could then sign a roofing contract - without the required approval (vote) of the "community" members - with a roofing contractor which this same CAI lawyer had already filed suit against (8) months earlier.

Other people have reported that U.S. Bank even offered to convert this $1/2 million dollar loan into an illegal special assessment without the required vote of the "community" membership. This would be illegal under California Law (Civil Code Section 1350-1376). However U.S. Bank and the CAI manager reportedly were all too eager to do this - with absolutely no disclosure or discussion with the "community" members.

U.S. Bank is a business enterprise (commercial bank) doing business in the State of California, and as such, is believed to be subject to Section 1770 of the Civil Code, also known as the "Unfair and Deceptive Practices Act". Some people are questioning whether U.S. Bank's political involvement with CAI in opposing AB 2598 violates Section 1770.

If Section 1770 of the Civil Code does apply in this situation, consumers around the State should register complaints about U.S. Bank's enigmatic and misleading representations, as well as those of Perry Communications. Both appear to believe that it is appropriate to engage a commercial bank to preserve CAI's rights to throw people like the Radcliffs out on the street.