In this edition of We Mean Business: “How They Did It,” Ananya Bhargava interviews Ames Alexander and David Raynor about their recent award-winning investigative series “Hopes Foreclosed.” This investigation uncovered how often HOAs in North Carolina are foreclosing on homeowners. It revealed not only a troubling trend of HOA foreclosures in the region but how many of those foreclosures were due to debts of less than $2,000.
Their series won the 2024 Bronze prize in the Barlett and Steele Awards Regional/Local category. Visit The Charlotte Observer to read their investigation or visit the awards page to view all the 2024 winners.
Transcript
[Intro music]
Ananya Bhargava: Welcome to a special edition of We Mean Business, where we dive into the stories behind the Barlett & Steele A ward winners. Join us as we uncover the winners’ investigative processes, the challenges they conquered, and the powerful impact of their reporting. “Hopes Foreclosed” is an investigation by Ames Alexander of The Charlotte Observer and [David Raynor of] The News and Observer that uncovered how often HOAs in North Carolina are foreclosing on homeowners. With the assistance of database editor David Raynor, the investigation was able to reveal not only a troubling trend of HOA foreclosures in the region but how many of those foreclosures were due to debts of less than $2,000. I am here with Ames Alexander and David Raynor to learn more about how they did it.
Ames Alexander: My name is Ames Alexander and I’m an investigative reporter for The Charlotte Observer, and I have been with the Observer since 1993 and I have investigated an array of different topics, from the exploitation of immigrant poultry workers, to nonprofit hospitals that have strayed from their charitable missions, to corruption and abuses in the prisons.
David Raynor: I’m David Raynor. I’m a data reporter with the News and Observer in Raleigh, and I’ve been with the paper since 1992. I am responsible for helping reporters and editors acquire, maintain, and analyze data for the newsroom. I’ve worked with Ames on many different projects, and I’ve worked with on a variety of topics as well. So currently on the investigative team with Ames. I do a lot of data analysis, charts, maps, research, public records requests and things like that.
Bhargava: It makes sense to start now at the beginning of the investigation. So first, I would like to ask you, what inspired you to pursue this investigation?
Alexander: So over the years, I’ve heard from a number of people who felt they were mistreated by their HOAs. And then last year, I got an email from a Charlotte woman who had a really disturbing story. She submitted plans to have new windows installed at her town home, and her HOA approved them, but after the windows were put in, the association reneged on its approval in order to replace these windows at her own expense. They said the windows didn’t match most of the others in the community. She refused, and the HOA began finding her $100 a day. And soon, those fines had racked up $12,000 in fines, and the HOA put a lien on her house, and that meant they could foreclose on her. So after I wrote that story, I began wondering, how often are HOAs in North Carolina foreclosing on homeowners? And that’s when I reached out to David, who is just an incredible data guru, and I asked him if there was some way he could use the state courts data to get some sense of how often this was happening. And I’ll let David talk a little bit about his initial work.
Raynor: There’s a database that we have routinely acquired over the years from the North Carolina State Administrative Office of the Courts of all civil case filings in the state. We get that data every year for five years. So we’ve used it for many different stories, and we felt like we could pull or extract and investigate the cases that were similar to the one Ames just described, where an HOA would sue the homeowner and why and for how much and just how often. So that was the main question: how often does this happen? How many times do HOAs go after homeowners? And we felt like there was a way into that data to do that.
Bhargava: So I noticed in your pieces, you talk about a first-of-a-kind analysis. So could you elaborate a bit more about what that is, and then also maybe talk a bit about how you verified the credibility of your sources?
Alexander: So, we scoured what had been written about HOA foreclosures, and there had been episodic stories about people who had lost their houses, but nobody had quantified how often it was happening. And I think that’s largely because it’s not easy! David did some stellar data work to kind of tease that out of the data. And then I started looking at dozens and dozens of paper files in the Mecklenburg County courthouse to get more information on these cases. So it’s not like you just click on a link on a website to get these numbers. It required a lot of legwork.
Raynor: Yeah, the reason it was the first of its kind, at least in our state, was as Ames said, there’s no reports; no studies had been done. We looked: we couldn’t find any. It’s not as if the homeowners association is going to..as far as we know, they’ve not studied this. Lawyers, even though they have their anecdotal stories and may have some numbers… in fact, one of our sources did have a pretty good handle on how many lawsuits they had filed. But statewide, and then looking at it by county: no one had ever done it. So again, it’s good that we have access to this database, this resource, and already being familiar with the structure of the database and what we could pull from it. We knew, if we could just have a couple of real cases where we could then kind of go in the back door and say: Okay, if this is happening with these two or three cases, there’s got to be more there. And sure enough, there were. I can’t remember the exact number now, a few thousand.
Alexander: Yeah, what your analysis showed is that there were more than 5,500 cases where HOAs filed to foreclose on homeowners since 2018 and in more than 600 of those cases, homeowners actually lost their properties as a result.
Bhargava: So, what were the main challenges you faced during the investigation and reporting process? And then also, how did you navigate these challenges?
Raynor: As we first discovered, it was fairly easy to pull those 5,500 cases just based on a particular code that says, okay, the HOA has filed a lawsuit against the homeowner, but that’s just the initial filing. So our challenge was over two or three months of talking, of looking at the data, digging deeper into the data, finding those cases where a homeowner had actually been foreclosed upon. We discovered that, in talking with some experts, that there was a process. So beyond that initial filing, there are, I think, about four or five other steps that have to be taken in order to reach the foreclosure process. So fortunately, there were particular codes in the database that we could use to extract those. So it was just time and learning the process. Ames was dealing with some of the, I’m not sure I should say victims, but defendants in these lawsuits. And so we were able to not only look at their particular cases and follow the steps that were taken as it pertained to the data, but then use that to pull other cases. So just understanding the process was a challenge, not just from Ames talking to defendants and HOAs and lawyers, but also from a data standpoint, and just how the data is structured.
Alexander: On my end, there were a number of challenges. David’s analysis gave us a list of homeowners who’d been foreclosed upon, and so I started calling dozens and dozens of these people. Emailing lots and lots of them, and most of these people didn’t return my calls and emails. I imagine many of them just weren’t eager to discuss this chapter in their lives. But a number of them did agree to talk to me after I explained that we were trying to shine light on a problem that wasn’t just affecting them, it was affecting a lot of people. A nd so ultimately, I got to have really illuminating interviews with a number of those people. And another challenge was kind of putting North Carolina’s situation in perspective. So I talked with a lot of lawyers who represent homeowners in HOA disputes, and they were saying that North Carolina’s laws were weak in terms of protecting homeowners. And then when I looked at the law, I found that, yeah, that’s true. In North Carolina an HOA can foreclose on a homeowner for any amount of unpaid dues. And we found that in many of these cases, HOAs were foreclosing for less than $2,000. The guy who was in the lead of our story, Eric Pepper, he owed about $500. Another thing unusual about North Carolina is that if an HOA wants to foreclose on a homeowner, they don’t even have to go before a judge. They can simply get the approval of a court clerk, and that’s a very quick and inexpensive process for an HOA. Some states have more rigorous requirements before HOAs can foreclose. They don’t let HOAs foreclose over tiny amounts of money. They require HOAs to go before a judge – not every state by any means, but North Carolina certainly doesn’t have rigorous protections for homeowners in that regard.
Bhargava: Now I would love to ask you about any highlights or surprises that you would like to mention about this entire investigation. I would love to hear when you were doing your data magic, like if there was anything there that maybe popped up. And of course, I would also love to hear like anything when you were interviewing any of the experts or any of the human sources that you had. Any surprises there, any sort of highlights, any “aha” moments, or anything shocking throughout the investigation, I would love to hear that.
Raynor: I’d say from the data analysis standpoint, the “aha” moment was when we learned that what record, or what code constituted an actual foreclosing. We were very pleased to see, “Okay, so this is the final step of the process.” To me that was just a great moment. And we kinda knew that we were leading to that point, but there’s gotta be somewhere in the data where we can say, “Okay, X number of these cases, where there was an actual foreclosure, not just a filing, not just another step in the process, but okay, this represents all of those who actually lost their home.” Now, even within those roughly 600 there are still some differences. And I think we even had one person who, yes, they lost their home, but they’re given the opportunity to buy it back, and certainly at a cost financially, emotionally and all of that. But that was, I think, from my standpoint, like, “Okay, yeah, we’ve got it.” And even then we keep fact checking. But it was good to get that finally nailed down.
Alexander: And there were a whole host of things in this investigation that surprised me. I was surprised to see the sheer volume of cases in which HOAs had foreclosed on homeowners. It was startling to see how many homeowners were losing their houses over really small debts, often $2,000 or less, some for debts of less than 500 bucks. Another thing that surprised me is when these homes are sold at foreclosure auctions, most were snapped up by investors for less than $10,000. And what that means is that the original owners lost not only their homes, but most, if not all, of their equity. The way it works is the proceeds from these foreclosure sales are first used to pay the debts to the HOAs and their attorneys, and then if there’s any money left over, it goes to the original homeowner. But if a house sells for $10,000 say, at a foreclosure auction, there’s not going to be much left for the original owner. And then, in the course of investigating this and talking with an HOA attorney, actually an attorney in Chapel Hill who represents homeowners in these disputes, I learned about this crazy federal lawsuit. And what it basically showed is that HOA foreclosures had the potential to open doors to financial predators. The lawsuit was filed against this North Carolina firm that was engaged in bid-rigging housing to limit competition and help its investors buy foreclosed homes at lower prices. And then the company was encouraging its investors to use this threat of taking people’s homes as a way to shake down owners for tens of thousands of dollars. So a federal jury basically ruled in favor of the homeowners and against this company in that case.
Bhargava: In your view, what is the role of investigative journalism in society today?
Alexander: I think a big part of our role is shining light on problems that people in power don’t always want revealed. I think it’s about giving people who are victims of these problems a voice. I think it’s about holding powerful people in organizations that aren’t always perhaps acting in the kindest or most ethical way. It’s about holding those people to account.
Raynor: A daily thing that runs through our work, our meetings, our discussions, brainstorming, all of that is just accountability and going beyond just stating facts, telling the truth, giving all sides, viewpoints and things like that, but just really putting all of that into context for the reader.
Bhargava: What advice would you give to aspiring young business journalists?
Alexander: One of the things is that it’s helpful to remember that some of the best stories start with questions. You know, if you hear about an isolated horror story, I think it’s always good to ask: is this part of a larger pattern? And if you find it is a bigger problem, remember to ask the “why” question: why is this happening? I mean, this investigation was largely propelled by a few big questions: How often are people losing their homes because of HOA foreclosures? What’s prompting these HOAs to take such draconian actions? And why is this happening so often in North Carolina?
Raynor: Just be curious and don’t dismiss anything that you just come across in reading others’ work, or just everyday life. What your neighbor says, your family member, friend, if they point something out to you, go investigate it if it piques your curiosity. And like, “Oh yeah, we’ve never really looked at that” or, “Well, maybe we have, but maybe we need to dig deeper.” And so obviously that’s advice for any journalist. But investigative just takes that beat reporting and obviously just expands it, digs deeper. So I would say [my] advice would be just to not dismiss anything.
[Outro music]
Bhargava: That was The Charlotte Observer’s Ames Alexander and The News and Observer’s David Raynor, who are the bronze winners of the Barlett and Steele Regional and Local category. To everyone listening, thank you for tuning in. For more information on the awards visit our website businessjournalsim.org.
