LAS VEGAS -- Two Las Vegas attorneys are going after hundred of Las Vegas HOA's. A federal lawsuit accuses the HOA's of illegally charging the government too much money on foreclosure insurance claims.
Attorney's involved say more than 500 associations have been named. The list of defendants is more than 20 pages long -- stretching 28 feet worth of paper.
The government has foreclosed on over 23,000 Clark County homes since 2008. Homeowners associations would go after Fannie Mae and Freddie Mac for unpaid HOA dues on those homes. The lawsuit alleges they charged for every month those HOA dues went unpaid.
Nevada law limits the amount they have to pay at between six to nine months of unpaid dues. They claim several hundred Nevada HOA's overcharged the government up to $15 million. The lawsuit even called it a "scheme."
When it comes to penalties, an attorney connected to the case says all of those HOA's may be liable for up to $50 million.
"The old saying that whiskey is for drinking. Water is for fighting. Well, HOA's are right there with any water dispute that you've ever had in the old west," said Keith Lynam, a realtor and former chairman of the Nevada Association of Realtors Legislative Committee.
Lynam fears if these HOA's lose in court, homeowners could feel the fallout.
"Who's left to pay? It's the existing homeowners no matter who's gone, who's there," he said. "The people that are in that association are going to be on the hook for a poor decision by their management company and a poorer decision by their collection company."
The lawsuit was filed April 8, 2012 and unsealed Wednesday. The HOA's themselves haven't even been served with the lawsuit yet. Twenty-one national banks and local collections agencies are also named in this case.
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