weather icon Clear

Despite foreclosure freeze, HOAs sending default notices

Updated June 11, 2020 - 1:43 pm

Daisy Maldonado knew she was behind on her homeowners association dues. But when a collection agency mailed her a notice recently, she read a dire message.


Maldonado, a 39-year-old auto loan underwriter who lives in North Las Vegas, had been slapped with a notice of default over her late HOA payments. The notice is a step on the trail to foreclosure — and it arrived amid a pandemic-sparked foreclosure moratorium in Nevada.

Gov. Steve Sisolak ordered a temporary freeze on foreclosures and evictions March 29 that is still in effect. Earlier that month, Nevada’s HOA ombudsman also said associations can extend “compassion and understanding” by halting liens and foreclosures amid the chaos.

Still, around 230 notices of default were recorded with Clark County from March 30 through May 26, largely by homeowners associations, a county database indicates.

Getting hit with a default notice does not guarantee a house will be sold at auction. But homes throughout Southern Nevada have been thrown into the foreclosure-processing churn during the coronavirus pandemic, often over a few thousand dollars in HOA-related debt, property records show.

“They’re pretty aggressive,” Maldonado said.

‘Aggressive foreclosure artists’

Sisolak’s order states, in part, that no “foreclosure action” can be “initiated” over a mortgage default during Nevada’s state of emergency, or until the governor ends the ban. It does not mention homeowners associations.

Nevada HOAs can sell homes through foreclosure if the owners fall behind on their association dues, which typically pay for parks, pools, street repairs, and other community work and amenities.

Filing a default notice against a delinquent property owner typically initiates the foreclosure process in Clark County. Filing one during the pandemic, however, is “at tension with the spirit of (Sisolak’s) directive,” UNLV law professor Ngai Pindell said.

Sisolak encouraged banks, borrowers, landlords and tenants to negotiate payment plans for any defaults that stemmed from pandemic-related financial hardships. HOAs are taking a more “formal” and “adversarial” approach, Pindell said.

Despite filing foreclosure warnings, homeowners associations are not scheduling sales or actually auctioning off homes, said Las Vegas attorney John Leach, who has filed default notices for HOA clients during the moratorium.

“If you look at it closely, it doesn’t address HOAs, quite frankly,” Leach said of the governor’s directive, adding: “I think we’re honoring the spirit and intent of that. I really do.”

He said an HOA has “a right to protect its interest”; state law mandates the “WARNING!” message in default notices; and Sisolak’s order cited mortgages.

University of Nevada, Reno political science professor Eric Herzik contends the filings violate “what Sisolak was intending” with the moratorium.

“They just blew off the governor’s directive, and it doesn’t surprise me,” he said, adding HOAs “are probably the most aggressive foreclosure artists in this state.”

The Las Vegas Review-Journal read through 50 default notices recorded in Clark County between March 30 and April 27. Nearly all stemmed from delinquent assessments or HOA dues, the filings said, and the claims averaged $3,218.84.

Red Rock Financial Services, a collection agency, has filed default notices for HOAs during the moratorium. But there is “no way” it would schedule a foreclosure sale until the order is lifted, said Steven Scow, an attorney for the company.

Overall, “99 percent” of foreclosure sales held at the Nevada Legal News building — Las Vegas’ foreclosure auction site — are being postponed or canceled during the pandemic, auctioneer James Vignale indicated.

Some that came up for sale were vacant homes, he noted.

Before the pandemic hit, he figures there were a few HOA sales per week, maybe one a day. Since the directive came down, he has done only one.

Nevada Attorney General Aaron Ford’s office said in a statement, in part, that it has not received any HOA-related foreclosure complaints since the governor issued the moratorium, though it “will continue to enforce the Directive as written for as long as it stays in effect.”

‘Compassion and understanding’

Sisolak’s foreclosure and eviction moratorium did not give tenants and homeowners a green light to live for free. But it was designed to prevent Nevadans from getting locked out of their homes amid the coronavirus outbreak, which shut down much of the economy virtually overnight and sparked skyrocketing job losses.

Nevada’s HOA ombudsman, Charvez Foger, had asked associations in a March 18 letter to put a moratorium on liens and foreclosures amid the turmoil. Such fillings are necessary for operations, he wrote, but “it is times like these where boards can extend their compassion and understanding to their fellow neighbor.”

He also asked boards March 30 to freeze enforcement of certain parking violations, writing that some HOAs “have been overzealous in their towing operations during this difficult time caused by the COVID-19 pandemic.”

The Community Associations Institute, an HOA industry group, has said associations should put a moratorium on foreclosures during the pandemic, waive late fees and penalties for homeowners who face financial hardships, and “continue to record liens to protect their interests.”

Nevada was one of several states to halt foreclosures amid the outbreak, but it “does not have a moratorium on collecting debt,” said Dawn Bauman, senior vice president of government and public affairs at the Community Associations Institute.

The institute, she added, strongly believes in “letting people know what they owe if they missed a payment.”

‘Maybe that’s what they do’

Maldonado, the underwriter, bought her house in 2009. After getting hit with a lien in March, she was slapped with a default notice in late April that said she owed $2,471.08, property records show.

Maldonado said her HOA dues are maybe $60 per quarter, and she agreed to a payment plan of $281 per month to wipe out her debt.

“It was pretty upsetting,” she said.

Heather Kolb, a teacher, bought her south valley house last year. She fell behind on her HOA dues because she thought they were included in her mortgage payment, and she didn’t receive mail for months because of problems with the post office, she said.

Kolb was hit with a lien in March and then a default notice in late April, which said she owed $2,885.18, property records show.

She’s not worried about losing her house, but it seems a little “ridiculous” that a $250,000 home would face foreclosure over a default a fraction of that size, she said.

“But I don’t know,” Kolb said. “Maybe that’s what they do.”

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.

Don't miss the big stories. Like us on Facebook.
Business Videos
Is Nevada the ‘gold standard’ for casino coronavirus response? - Video
Whenever experts begin comparing gaming jurisdictions, you’re bound to hear the phrase “gold standard” dropped in the conversation. (Las Vegas Review-Journal)
Resorts World Las Vegas activates 100,000-square-foot LED screen - VIDEO
Resorts World Las Vegas activated its 100,000-square-foot LED screen on its west tower on Independence Day, showing a digital fireworks display. (Las Vegas Review-Journal)
Station Casinos president dies in watercraft accident - VIDEO
Richard Haskins, president of Red Rock Resorts Inc. and Station Casinos, died Saturday in a watercraft accident in Michigan, according to a statement released by the company. (Las Vegas Review-Journal)
Hockey arena opponents erred in ballot initiative - Video
Opponents of a minor league hockey arena in Henderson collected enough verified signatures to put the disputed project on the November ballot, but then a problem emerged: A procedural error on the petition.
Layoffs at 'The Drew' force staff to sue owner
Rj Business reporter Eli Segall talks about the lawsuit and the future of the unfinished hotel and casino.
Vegas tourists react to mask mandate - VIDEO
Governor Steve Sisolak announced on Wednesday a mandate to wear face masks starting Friday. Down on the Las Vegas Strip tourists reacted on camera to the news. (James Schaeffer / Las Vegas Review-Journal)
LVCVA #VegasSmart social media campaign brings awareness to wearing a mask - Video
Now that Gov. Steve Sisolak has announced requirements to wear masks in public settings in the state, the Las Vegas Convention and Visitors Authority will attempt to deliver the message to prospective visitors via their #VegasSmart social media campaign. (Heidi Fang/Las Vegas Review-Journal)
Nevada's unemployment crisis - Video
Thousands of jobless workers turned to the state for payments after the COVID-19 shutdown in March. DETR has struggled to handle record claims. (Las Vegas Review-Journal)
Caesars mandates guests to wear masks
Guests at Caesars Entertainment Corp. properties will be required to wear masks while inside its properties, effective immediately.
MGM Grand and Aria are reopening pool clubs - Video
MGM Grand’s Wet Republic Ultra Pool and Aria’s Liquid Pool Lounge plan to open July 2, according to a Wednesday statement from MGM Resorts International and Hakkasan Group. (Las Vegas Review-Journal)
Survey shows big reluctance to travel with coronavirus ablaze - VIDEO
Would-be travelers are becoming more pessimistic in their outlook about their safety when they travel. (James Schaeffer / Las Vegas Review-Journal)
Downtown's Circa resort will begin taking room reservations Wednesday - Video
Circa developer Derek Stevens confirmed that when the property opens on Oct. 28, persons under the age of 21 won’t be allowed. (Michael Quine/Las Vegas Review-Journal)
Downtown Las Vegas’ Circa resort will begin taking room reservations - Video
Downtown Las Vegas’ Circa resort will begin taking room reservations on Wednesday. (Las Vegas Review-Journal)
Culinary union expresses concerns about returning to work - Video
The Culinary union expresses its concerns about returning to work and the safety precautions that casinos are taking to ensure the safety of staff.
Bellagio poker room reopens with approval to host six-handed games - Video
The installation of plexiglass dividers between the players gave the Bellagio an edge over the other poker rooms open in Las Vegas. (Las Vegas Review-Journal)
Westgate reopens after coronavirus shutdown - Video
Jay Kornegay, vice president of Westgate Sportsbook, talks about the reopening of the casino on Thursday, June 18. (Rachel Aston/Las Vegas Review-Journal)
Final beam of Circa resort tower moved into place - Video
A crane whisked the final beam in the construction of downtown Las Vegas’ Circa resort property into place Friday morning, June 19, and crews paused momentarily, then continued working to ensure the casino's Oct. 28 opening. (Michael Quine/Las Vegas Review-Journal)
Paris Las Vegas reopens - Video
The Paris Las Vegas hotel-casino reopened its doors on June 18 after the statewide shutdown in response to COVID-19. (Mackenzie Behm/Las Vegas Review-Journal)
Masks required at casino table games in Nevada - Video
The state Gaming Control Board has ordered Nevada casinos to require players and spectators of most casino table and card games to wear protective face coverings.
Downtown Las Vegas’ Circa to open in October - Video
Circa resort-casino’s first five floors are set to open Oct. 28, according to CEO and developer Derek Stevens. (Michael Quine/Las Vegas Review-Journal)
Las Vegas movie theaters set July reopening date - Video
Las Vegas movie theater reopenings will start Regal, the valley’s largest exhibitor, announced Tuesday that it will reopen its theaters starting July 10, albeit in a modified fashion. (Heidi Fang/Las Vegas Review-Journal)
Contractors say they’re owed $36M for work done at Drew Las Vegas - Video
Three months after coronavirus turmoil shut off construction of the Drew Las Vegas, contractors have levied claims for more than $36 million in unpaid bills. (Heidi Fang/Las Vegas Review-Journal)
Contractors say they’re owed $36M for work done at Drew Las Vegas
Three months after coronavirus turmoil shut off construction of the Drew Las Vegas, contractors have levied claims for more than $36 million in unpaid bills. (Michael Quine/Las Vegas Review-Journal)
Many Las Vegas guests ignoring COVID-19 protocols
Casinos are putting safety first but many Las Vegas guests are not socially distancing.
As Las Vegas casinos reopen, not every employee is convinced it's safe to go back.
As Las Vegas casinos reopen, some employees aren't convinced it's safe to go back.
1.54M Americans filed for unemployment last week - Video
The U.S. Labor Department released the unemployment numbers on Thursday, June 11. (Las Vegas Review-Journal)
1.54 Million Americans Filed for Unemployment Last Week
1.54 Million Americans Filed for Unemployment Last Week. The U.S. Labor Department released the unemployment numbers on Thursday. The number of jobless claims was just below economists' predictions of 1.55 million claims. 1.897 million Americans applied for unemployment insurance the previous week. More than 44 million Americans have filed jobless claims in the past three months. Continuing claims nearly topped 21 million. The numbers follow the May jobs report, which revealed that more than two million jobs were added to the U.S. economy in May. Initial jobless claims continued the gradual downward trend. But it is still hard to square the claims figures with the much more upbeat news on the labor market from May’s Employment Report, Capital Economics, via Yahoo Finance
Visitors return to Las Vegas
Guests returned to Las Vegas casinos throughout the weekend. Casinos reopened on Thursday after being closed for 78 days because of the coronavirus pandemic.
Gov. Sisolak tours casino property after reopening - Video
Gov. Steve Sisolak and Sandra Morgan, chairwoman of the Nevada Gaming Control Board, participated in a tour of the Wynn Las Vegas hotel-casino where they share their first thoughts on casinos reopening. (Erik Verduzco/Las Vegas Review-Journal)
Treasure Island reboots operations after coronavirus shutdown - Video
When casinos shut down, not only were tourists unseen on the Las Vegas Strip, but jobs were temporarily lost. Treasure Island took the months off to remodel and fix the property, adjusting the casino for COVID-19 norms. Now that they’re open again, management is slowly hiring back staff as guests return. (Rachel Aston/Las Vegas Review-Journal)
Lake Las Vegas beach mansion lists for nearly $6M

A Mediterranean-style mansion on the south shore of Lake Las Vegas has hit the market for $5.95 million, and it’s as if you’re transported to northern Italy with its views overlooking the water.

Apartment complex to open in Arts District

The 63-unit Share Downtown, at the corner of Casino Center Boulevard and Colorado Avenue, is scheduled to open later this month, with the first 16 units now available for lease, management announced Wednesday.