At that time, only 50 of the 168 townhomes planned for the lakeside community had been built.
Construction stopped abruptly, leaving the ghostly gray frames of three buildings as a fixture of the landscape.
Aspen Hills is among the communities with homeowners associations that are enduring the full force of the economic hurricane.
Marjorie Murray, a housing policy analyst and president of the Center for California Homeowner Association Law, a nonprofit consumer advocacy group, said that in bankrupt developments throughout the state, homeowners "are living in an island with wreckage all around them and it is completely unclear what their recourse is."
Because of the housing crisis and job losses, many community associations nationwide wrestle with high delinquencies in the collection of homeowners fees that are their lifeblood, said Frank Rathbun, spokesman for the Community Associations Institute, a Virginia-based educational organization that advocates on behalf of community associations.
In Florida, community associations recently were dealt a setback when a state appellate court denied a motion to compel a bank to complete a foreclosure on a property where neither the mortgage nor association fees were being paid. Nor could the bank be forced to start paying the association fees.
Frozen in mid-construction when the real estate market collapsed, Aspen Hills has an uncertain future. Homes continue falling to foreclosure, leaving the homeowners association in a struggle to provide services with diminished income.
Neither the builder nor its lenders can be required to complete the project or deliver promised amenities.
In Moreno Valley, Aspen Hills' entry gates at Lasselle Street are always swung open, stirring the ire of homeowners who had expected the security of a private community. But the gates were never automated.
amenities lacking
The clubhouse, stripped of furniture by thieves, and a partly completed swimming pool are behind fencing, off limits to residents. Weeds choke the banks of the lake, areas planned for parks with barbecues, and children's play yards. Grass and shrubs are irrigated with water siphoned from a fire hydrant because a modern irrigation system using recycled water was not completed.
Residents say they bought into the idea of a pleasant, low-stress community. That has not materialized.
"From what they pitched us, you buy a house and move in and pay your HOA dues and everything would be taken care of," said Jamaal Cannon, an elementary school physical education teacher and the homeowners association's president.
The economy also has taken its toll on residents who have been forced into foreclosure or chosen it rather than continuing to make payments on houses they could buy today at a third of what they paid for them, said Piper.
According to multiple-listing information about the Aspen townhouse community, a three-bedroom home that sold new in Aspen Hills for $357,500 in July 2007 recently resold after being listed for $102,000. A two-bedroom home similar to one that sold for $251,280 in 2007 resold for $81,000 in November.
Piper said of the 42 homes Prestige Homes sold when the project opened three years ago, 14 have gone to foreclosure, and three others were resold for less than their mortgages.
In March 2009, Temecula-based Equity Management resigned as Aspen Hills' management company and turned over all responsibilities to homeowners on the community's association board.
Equity Management had not been paid for eight months, said Carol Piering, spokeswoman for Associa, Equity Management's corporate parent. "We were very sympathetic to what was happening, but it got to the point that we had to let Aspen Hills go," she said.
Before filing for bankruptcy, Prestige Homes paid the association's ongoing bills. Homeowners association fees were deposited into a reserve account to cover future maintenance expenses like painting and roof repairs for which condominium associations are responsible, Piper said.
But after Prestige notified Aspen Hills residents it was going bankrupt, Piper said, Prestige halted its financial support and the association was forced to deplete its reserves as monthly bills exceeded revenue.
Company quit paying
Prestige Homes stopped paying the association's fees for eight unsold homes, including six boarded-up model homes. As of May 1, Piper said, Prestige owed the association $63,776, a sum that grows by the month.
Also, Piper figures that only 18 homeowners are regularly paying their monthly fees. In all, he said the association is owed about $97,000 from the builder and delinquent homeowners.
Piper said some homeowners argue that they should not pay fees because they are not getting the lifestyle they expected.
"We were sort of abandoned by the developer and management company that was initially here. ... In my mind it is a breach of contract," said Eulanda Page, a homeowner who contends that her fees should be reduced, not raised as some have suggested to replenish the reserves.
Piper said he has gone door to door trying to explain to homeowners that unless they pay their monthly fee of $217.40, the association can't pay for vital services like trash pickup, sewer and water.
breaking point
At one point last summer, Piper said, the association owed so much to the local water district that the district threatened to shut off the irrigation water. That prospect was averted, he said, by negotiating a plan to pay off the balance.
In a belt-tightening effort, volunteers from the community perform much of the landscaping and maintenance. Piper spends 10 to 40 hours a week on association work.
Piper said he has called city and state agencies for help but learned that none have authority to assist an association in Aspen Hills' predicament. As a last resort, he searched the Internet for professional advice.
John Cligny, a property manager with Association Management Company LLC, in the San Francisco Bay Area, said Piper contacted him by mistake, thinking Cligny was in the South Bay area of Los Angeles County.
Cligny realized Aspen Hills was "kind of at the end of their rope," so he flew to Southern California to talk to the association members about their options.
Early last month, as an act of charity, Cligny took on the association as a long-distance client at a discounted rate. He says their predicament underscores the need for legislative changes to help homeowners associations survive an onslaught of financial troubles stemming from the economy.
Cligny recommended amending the association's governing documents to prevent Aspen Hills from being overrun with investors, who so far have purchased 18 of the houses and converted them to rentals.
Owner occupants cannot buy homes using FHA mortgages at Aspen Hills, Cligny said, because the FHA will not insure loans in communities where more than 15 percent of the homes are 30 days delinquent on assessments.
Aspen Hills will get a second strike against it if rentals exceed 50 percent of the units, which would give the FHA yet another reason for refusing to back loans to owner occupants there.
Cligny is urging the association to more aggressively collect fees and, when necessary, send neighbors to collection agencies and place liens on the homes of those who fail to pay.
liens fall short
But Piper said the association's liens are worthless when homes are sold in foreclosure. Because home values have fallen dramatically, he said, nothing remains from the proceeds after lenders, whose claims have priority, take their share.
Assessment delinquencies have become thorns in the side of homeowners associations across the state, said Kelly G. Richardson, who chairs the legislative action committee of the Community Associations Institute.
What would help, he said, would be state legislation giving associations the right to take nine months of delinquent assessments off the top of a foreclosure sale.
"It would be a godsend for the associations' (liens) not to be wiped out over and over again," he said. Because of the assessment losses, he said, other homeowners are forced to make up the shortfall through higher assessments or declining services.
The problem is magnified, Richardson said, because banks are stalling the foreclosure process, which lets delinquent assessments pile up. Banks do not have legal responsibility for paying such fees until they take possession of a home, and then they are not required to pay the former owner's obligations, he said.
Aspen Hills residents are eager for Prestige Homes' lenders to foreclose on the unfinished portion of their neighborhood and arrange for a developer to build out the rest of the lots and amenities.
Five-bank consortium
But the five-bank consortium represented by Wells Fargo is not legally required to foreclose on the project, and it isn't clear that they will do so, said Mike Buckley, the consortium's bankruptcy lawyer.
In August 2008, the bankruptcy court granted a motion that allowed the lenders to foreclose on residential projects that Prestige Homes had been developing in California and Arizona, but ownership of Aspen Hills remains in the bankrupt builder's name.
Trustee auctions have been scheduled repeatedly and then canceled for "a wide variety of reasons," said Buckley, declining to be more specific.
Because the lenders have not taken title to Aspen Hills, they have no obligation to start paying association fees on the eight unsold homes. Nor are they going to complete the swimming pool, parks and gates.
Jeff Last, managing director for XRoads Solutions, a real estate consulting firm working for the consortium, said to protect the public safety and to fight blight, the lenders have fenced off the clubhouse, pool and abandoned framed houses and hauled away construction debris.
Last said it does not make sense for the lenders to spend more on the property when it is uncertain if they will take possession. "If we foreclosed, I would anticipate we could do a lot more," he said.
Today there is no market for new attached housing in Moreno Valley, according to Steve Johnson, who heads the Riverside office of Metrostudy, a real estate research firm. "The banks probably realize there is very little demand for the project. So they are not in a hurry," he said.
But Cligny said the community can't afford to wait. "There needs to be some responsibility put on lenders that requires them to perfect the foreclosure and not leave a project in limbo. I think they have responsibility to people who in good faith purchased in the project," he said.
Cligny said he has filed, on behalf of the Aspen Hills Community Association, a claim on bonds that Prestige Homes purchased that could cover a portion of the builder's unpaid homeowners association fees.
The relief that the association could get is limited since such bonds cover only six months worth of assessments, according to the California Department of Real Estate.
bonds said lacking
Also Robert Gilmore, district manager of the department's Southern California subdivision section, said Prestige Homes did not post a bond to guarantee that the community's recreation center, including the swimming pool and clubhouse, would be completed.
A developer is required to post a bond or refrain from mentioning amenities like a recreation center that are not yet built when pitching a new community to prospective home buyers.
Developer James Previti Sr., who owns Prestige Homes and seven other companies that have gone into bankruptcy, did not return calls to find out why a completion bond had not been posted.
Also, escrow instructions that Prestige Homes filed with the Department of Real Estate said the entry gates would be built before home sales occurred, which Gilmore said would logically mean the gates also should function.
Gilmore said if Aspen Hills homeowners complain to the Department of Real Estate that advertised amenities were never delivered and the builder did not buy a completion bond, their complaint would be sent to the department's enforcement section for investigation.
If Prestige Homes is found at fault, Gilmore said, the department could prevent Prestige Homes from selling more townhouses at Aspen Hills or forward the case to local authorities for criminal prosecution. But he acknowledged it's hard to see how either action would get the community back on its feet.
There are many loan owners who simply overextended themselves and bought more property than they could afford. Most did this out of desire for appreciation, but some simply wanted a nice house, and with nobody involved with the tranaction to tell them no, many people over borrowed.
This property is in backup or contingent offer status.
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