California Foreclosure Crisis 2020

Community Associations Are Being Hung Out to Dry

Hung Out to Dry Meaning. Definition: To abandon someone who needs help. A variant of this phrase is left out to dry, as in, you left me out to dry.

California HOAs and Condo Associations are facing a foreclosure crisis that will result in decreased cash flow and financial hardships unseen even during the last major housing crisis.

New law to prevent California Associations from foreclosing due to delinquent assessments

Due to the Covid-19 crisis community associations in California will be denied the right to pursue foreclosure actions (both judicial and non-judicial) in order to collect delinquent assessments.  Although not yet passed, AB 828 would add Civil Code §2944.11 to the California Civil Code that will end foreclosure actions for a year and a half. If this ill-advised law passes, it’s going to do great damage to condos /HOAs throughout California.

Associations will still be permitted to record a lien for delinquent assessments but are prohibited from moving any further in the foreclosure process. If this bill comes into law, it will remain in effect until January 1, 2022 and given the lead time to foreclose you can add another few months to that date. In essence, from a legal perspective, there will be absolutely nothing a condo / HOA can do to collect delinquent assessments.

Can your community association afford a 2-year upheaval of your cash flow?

Roseman Law APC has given associations the sage advice to: “plan and budget for the prospect of a significant decrease in the “cash flow” generated by assessments for at least the next two (2) years.” It’s good advice but it will be very hard to follow.

Another concern for HOAs will be a wave of invoices from unsuccessful collection services provided by law firms and trustee companies utilizing traditional methods of collections that won’t be available once AB 828 becomes a law.

There is an alternative that doesn’t hurt your community’s cash flow

There may be a silver lining to this foreclosure crisis in that community associations in California are now going to be forced to find alternative collection solutions to their delinquency issues. We say it’s a silver lining because we feel there is a better way to recover delinquencies than forcing people out of there homes.

So what is a better alternative to collect delinquent assessments from owners who don’t pay their fair share? Associations can send their delinquency files to a merit-based collection agency.

A merit-based collections agency takes the burden off the community association’s shoulders

What California associations need during this foreclosure crisis is a specialized collection agency that will recover 100% of their assessments and pass through the costs and fees to the delinquent owners. A collection solution that defers all fees and costs, and if they cannot collect, would waive off all these fees so that the association is not on the hook, and losing more money.

A more perfect collection solution would not only have a success record nationally but advanced technology to keep management and the boards of directors appraised of all actions taken.

Such a specialized collections company knows the community association industry and would be able to underwrite a delinquent unit, find out who the lender is, reach out to mortgagees to pay for the past due assessments, do skip tracing, make outbound calls, send demand letters, report delinquent owners to credit bureaus, and work out payment plans.

The company that is up to this task is Axela Technologies and we have an office in California at your service.

Axela Technologies is Ready to Help California HOAs and Condo Associations Collect

“We never liked the idea of foreclosing and always believed that foreclosure should be the measure of last resort in order to collect delinquent assessments” says Alisher Sabirov, Vice President of Axela Technologies.

“We always have found a better way and we have produced results for hundreds of associations nation-wide. Now, in California if associations want to stay financially responsible we are here to help,” continued Sabirov.

Axela Technologies has kept thousands of people in their homes, and put money back into association’s operating accounts. It’s done by working with delinquent owners to get their association obligations paid so when Civil Code §2944.11 takes effect Condos /Homeowners Associations will have a proven solution to turn to.

Click here for a free no-obligation collections analysis and let our expert representatives in California explain the process to you.

Click here to download our free California Collections Guide.

Axela…It’s how the future collects.

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