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Consumer Watch: Front-line foreclosure

With husband in Iraq, missed homeowners association payments cost couple their home

Jul. 12, 2010 - 11:47AM   |   Last Updated: Jul. 12, 2010 - 11:47AM  |  
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Deployment stress can affect virtually every aspect of your life.

But you may not realize how it can damage your finances.

One military couple in Frisco, Texas, who missed several payments of homeowners association dues found out the hard way when their HOA foreclosed on their house while the soldier was deployed.

Army National Guard Capt. Michael Clauer and his wife, Maflorence, fell victim to a Texas law that allows HOAs to foreclose on homeowners who have not paid their debts, without having to go to court.

In June 2009, while Clauer was deployed to Iraq, his wife told him over the phone that their HOA had foreclosed on their $300,000 house, then sold it without their knowledge because the Clauers had fallen $800 behind in their dues.

After someone bought the house at auction for $3,600, it was sold again for $135,000, said the Clauers' attorney, Barbara Hale.

The Clauers had no mortgage. Maflorence Clauer's parents, who live in the Philippines, originally bought the property and later transferred an unspecified interest in the property to their daughter in 2006.

The Clauers admit they made mistakes. Notices about the late dues and warnings of foreclosure came to the house. Clauer said his wife was in such a state of stress over his deployment his first combat deployment in their 15-year marriage that she didn't open them.

Still, Clauer said HOAs should not have the right to foreclose on a house without so much as a phone call or a knock on the door.

"I couldn't believe a homeowners association would have that kind of power," he said. "That's something banks wouldn't even do."

But Texas is one of a handful of states that give HOAs the power to foreclose without going to court, said Hale.

"Homeowners associations in Texas have more power than cities and counties for unpaid taxes and assessments," she said.

Still, she contends that Clauer's rights were violated under the federal Servicemembers' Civil Relief Act.

Air Force Reserve Col. John Odom, a Louisiana attorney and recognized expert on the SCRA, said the law bars foreclosures on active-duty members without a court order.

If the HOA had filed a lawsuit and papers had been served, Odom said, at least Maflorence Clauer would have known what was happening.

"She would have had the opportunity to come to court and ask for protection under the SCRA," he said, including seeking temporary suspension of proceedings that can affect service members and their families.

The SCRA applies to unpaid debts incurred before being called to active duty as well as during that time, Odom said.

A U.S. magistrate judge has recommended to the district court that the Clauers be allowed to pursue a federal lawsuit under the SCRA against Heritage Lakes Homeowners Association and the purchasers of the property.

Past due, and forgotten

An HOA official said the association tried to find out if Clauer was on active duty and under the protection of the SCRA but miscommunications with the Army and the Defense Manpower Data Center only added to the confusion.

In the meantime, through a court order and an agreement between the Clauers and the new owner, the couple has been able to stay in the house.

The Clauers owed $1,768.73 to their HOA as of Feb. 14, 2008, for dues going back to July 2007, said a Heritage Lakes Homeowners Association spokesman, who spoke on the condition he remain anonymous, because employees of the 600-member HOA have received death threats following news reports on the Clauer case.

Hale said $800 was in delinquent dues; the rest of the debt was attorneys' fees and other charges.

"The homeowners association is not saying they don't want the Clauers to get the house back," the HOA spokesman said. "Their position is that they shouldn't be sued over it."

Clauer, who was called to active duty in support of Operation Iraqi Freedom on Feb. 15, 2008, said he and his wife readily admit they missed payments, as both were under stress, he was working long hours, and their daughter had medical issues. The $346 quarterly HOA dues slipped off their radar before he left for Iraq.

"When I'm home, I help with the bills," Clauer said. "When I got activated, I was working every second of every day."

His wife "was worried about my safety, especially with our mission of convoy security," Clauer said, adding that she didn't feel like she knew the members of her family readiness group well enough to confide in them and ask them for help.

She found out about the foreclosure and sale of their home in June 2009, when she called the HOA because she hadn't received a bill for the quarterly dues.

"They told her the house was in somebody else's name," Michael Clauer said. She immediately hired an attorney, and Clauer's military attorneys in Iraq helped provide her information.

"During all this time before that, [the HOA] never said a word," Michael Clauer said. "And she had continued to make the payments for association dues, because the association was still sending bills."

‘Bills do not stop coming'

The couple had missed several HOA bills before Clauer deployed. After he deployed, his wife opened HOA bills and paid them, but there was no information on the bills about previous unpaid balances, he said.

She opened some mail, he said, because she had good days and bad days. And among the mail she did not open were the separate HOA notices about late payments and potential foreclosure on their home.

"The homeowners association could have turned this over to a collection agency. At least [the collection agency] would have called the house."

The HOA spokesman said industry professionals advise against knocking on people's doors, but added that in the future, the Hertiage Lakes HOA will make phone calls in such situations.

Still, the spokesman said HOA officials "made numerous attempts to contact the Clauer family concerning their homeowners dues with first-class and registered letters dating back to October 2007."

Odom said the lesson for military families is that "bills do not stop coming just because you deploy. In your pre-deployment plans, you have to ensure that bills will be paid."

Sit down with family members, talk about the bills that come in, and when. Make plans to call and ask about the bills if they have not arrived.

"This didn't have to happen," Odom said. "The case wouldn't have arisen if Mrs. Clauer had availed herself of support services. There are people whose job it is to help you, and who want to help you."

Service members should ensure that their spouses know where to go at the armory, the reserve center or the installation, and make sure they have a phone number to call for help. Troops or spouses with questions can visit, which offers resources for virtually every aspect of military family life.

Clauer said his family is lucky to have SCRA protections that allow them to pursue the case.

"If not, we would be living on the street," he said. "But we want to get this Texas law changed. We want to stop this from happening to other people."

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