First, let me state for the record, and right off the bat, that there are times when a Condo or HOA has no other choice than to foreclose on a delinquent unit, but it should be the solution of last resort. Unfortunately, many community associations today are still acting like it’s 2008, and prematurely turning to foreclosure. This outdated Condo & HOA Lien / Foreclosure process is not working for your community or for your homeowners.
Community Associations Learned the Wrong Lesson in 2008
Back in the bad old days (2008-2015) owners were walking away from units that had no equity in them, leaving the association holding the bag to cover the maintenance fees. There was a world of amateur undercapitalized investors who obtained “liar loans” and bought multiple units. They could not sell their units, nor could they afford to pay the association fees and their mortgages. So, they simply walked away.
There was nobody to collect from and the banks were not foreclosing fast enough, because once they realized and recognized a loss on their balance sheets, they had to increase their cash reserves. That is why so many banks failed or were absorbed by the bigger banks. It was criminal, but that is the subject for Hollywood to cover (and cover again. And again and again and again.)
The only way to recover was to skip to the end, fast.
The only solution that the associations had at the time was to foreclose on the properties and either rent them out or sell the “intervening & encumbered title” to an investor who would profit by renting them. Eventually, the banks would come around for their units and some of these investors would delay the foreclosure in court to extend their profits. Under that ‘system’ community associations were able to recover the delinquent fees due to them because they would have years to recover before the bank would take the title. This system doesn’t work anymore.
More importantly, this isn’t what the condominium/HOA concept was created for. Community associations were developed to be homes for people, NOT playthings for investors. There is a better way to collect delinquent Condo and HOA maintenance fees.
A New Paradigm in the Community Association Industry
“The times they are a-changing” more than a dozen years later, we are facing a new paradigm in the community association industry. There will always be delinquencies but even through the pandemic, property values continued to rise. This means that there’s a lot of equity in today’s properties and no homeowner with any sense should lose a unit to an association foreclosure. People are not abandoning their property. There’s no longer a need for associations to approach collections with extreme prejudice. Community association collections must be escalated in a gradual yet resolute manner.
If your Condo or Homeowners Association has delinquencies and the courtesy notices are not bringing in the money, don’t jump straight to lien and foreclosure! Your next step should be a merit-based collection agency that costs the association zero.
Move Your Association Out of the Past
The condo and HOA Lien / Foreclosure process you are currently following is so 2008. It’s time to stop jumping straight to the end, and start working with homeowners to help them get current. Yes, your Community Association’s cash flow must be maintained, but this can be accomplished in a more “community-friendly” and ethical way than foreclosure.
Consider the right collection agency for this job. Consider Axela Technologies who will work with your owners using specialized trained collectors and the most cutting-edge technology to get the job done. Axela will never send your community association a bill because all their fees are charged through to the delinquent owner and if we do not collect, we don’t get paid. Do the right thing for your community association and use the proper tool for the task at hand. Contact us for a no-cost no-obligation review of our process and technology. Boards of Directors and Management companies will be impressed with our results.