Homeowner associations foreclose on residents

In exchange for adhering to the rules, homeowners got safe communities with clubhouses, pools and tennis courts. But what many didn't realize when they bought their homes was that the fine print gave the association the right to foreclose — even over a few hundred dollars in unpaid dues.

All the association board has to do is alert its attorney to place a lien on the property to start the process. The home can then be auctioned by the board until the bank eventually takes ownership. Homeowners typically have no right to a hearing.

Today, one in five U.S. homeowners is subject to the will of the homeowners' association, whose boards oversee 24.4 million homes. More than 80% of newly constructed homes in the U.S are in association communities.

And of the nation's 300,000 homeowners' associations, more than 50% now face "serious financial problems," according to a September survey by the Community Association Institute. An October survey found that 65% of homeowners' associations have delinquency rates higher than 5%, up from 19% of associations in 2005.