TEXAS SENATE HEARINGS
Senate panel hears pleas to shut down 'foreclosure factory'

 
Transcripts of available Speeches + Comments
Comment by Jan Bergemann
Letter by Bob Adolph - Supporting Document
Speech by Richard Craig, CHORE

 
Both sides argue homeowner issue

By MIKE SNYDER
Courtesy  Houston Chronicle
May 29, 2002

AUSTIN -- Advocates for people sued by homeowners associations pleaded with state lawmakers Tuesday to shut down a "foreclosure factory" driven by lawyers and property management companies in the Houston area. 

Attorneys for the associations said they would support procedural safeguards for homeowners facing foreclosure suits, but they held fast to their argument that the associations must retain the authority to foreclose on homesteads and recover legal fees. 

In a packed hearing at the Capitol, a state Senate subcommittee continued its effort to craft legislation supporting the functions of homeowners associations while curbing frivolous suits and extravagant legal fees. 

The subcommittee's work is the latest in a string of legislative efforts to provide better regulation of mandatory homeowners associations, which a previous panel concluded were "de facto political subdivisions." 

Outrage over the case of 83-year-old Houston widow Wenonah Blevins, who lost her $150,000 home for a time last year over an $814.50 delinquency, has advocates hopeful about enacting significant changes in the legislative session starting in January. 

Court records compiled by Houston activists show the number of annual foreclosure suits filed by Harris County homeowners associations tripled between 1985 and 2001. 

State Sen. Jon Lindsay, R-Houston, who chairs the subcommittee reviewing the issue, said the numbers probably reflect lawyers' growing recognition of the fees they can earn in such cases. 

Speakers urged subcommittee members to proceed cautiously, warning that burdensome new regulations could discourage people from volunteering to serve on association boards. 

Wendy Laubach, a lawyer who testified before Lindsay's subcommittee Tuesday, told the subcommittee of a Harris County subdivision that recently ousted its association board and abolished mandatory assessments and foreclosure suits. 

Laubach said that reflects growing recognition that "you can't use the court system to fight about minutia. It has to be funded from somewhere, and it's being funded from home equity." 

Lawyer William Gammon said a "mob mentality" has fueled pressure for reform. 

He suggested that the subcommittee's work is largely unnecessary. 

"People jumping up and saying things that aren't true is what got us here in the first place," said Gammon, who has been identified through court records as Harris County's most active filer of foreclosure lawsuits for homeowners associations. 

The subcommittee's first hearing was in Houston in January. 

Since then, a group of lawyers representing the associations drafted a list of changes to state law they said they could support. 

The proposed changes include expanded rights to hearings prior to foreclosure, a prohibition on lawyers billing homeowners directly, requiring that homeowners approve new fees before they are imposed, and limiting cases in which attorneys fees could form the basis for a foreclosure. 

Lawyers representing homeowners sued by associations said the proposals are insufficient. 

They called for elimination of non-judicial foreclosures, new procedures to resolve disputes before filing suit, better notice to homeowners before foreclosure, and limits on associations' ability to collect legal fees. 

"Our message is simple. We want to fight the foreclosure factory," said David Kahne, one of the four lawyers representing homeowners who drafted recommendations for the subcommittee. 

Lindsay said the subcommittee will develop a draft of recommended changes for review by the full Senate Intergovernmental Relations Committee before its introduction as a bill in the next legislative session. 


 
SOME COMMENTS
By Jan Bergemann
It is absolutely amazing that some people are still denying the truth, even after it's fully documented by competent people. 
The statement by Lawyer William Gammon that a "mob mentality" has fueled pressure for reform and "People jumping up and saying things that aren't true is what got us here in the first place," is exactly the arrogant statement expected from somebody who has been caught red-handed. The HOA foreclosure data from Harris County clearly identifies him as the attorney with the most court filings according to court documents. 
It is very obvious that members of CAI (Community Association Institute) don't like Senate hearings, where legislators may be confronted with many unhappy homeowners and the danger that these legislators may find out the truth about these 
"isolated incidents".
The CAI opinion about Senate hearings, part of the democratic process of our society, is possibly best described with a quote from a CAI-Executive: "likely just to be a traveling gripe-show." 
Doesn't that say it all?

In my opinion even these industry partisans have realized in the meanwhile that they are trying to defend the "indefensible". It is more and more obvios that the system fails the people it should protect, namely the homeowners. Even their normal defense that they are as well representing the homeowners is defeated and they are just hanging on to their wallets. These Homeowners' Associations are a great cash cow for these industry partisans and I for sure can understand why they are trying to hang on to the existing system. Not to protect property values or working in the interest of the associations - please note : homeowners are the only members of a homeowners' association -, but to protect their own wallets and bank-accounts.
These attorneys are fighting for their own benefit, not of that of their clients!