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Beware of Predatory HOA Collection ‘Solutions’

Beware of Predatory HOA Collection ‘Solutions’

  • Posted: Jul 08, 2021
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Foreclosure Does Not Equal Fund Recovery

Mitch Drimmer | 7 July, 2021

Every association should have an attorney who is charged with overseeing any legal work that arises. But is collections included in that ‘legal work’?

Attorneys continue to be the de-facto solution for collecting past due assessments, but this is only a viable option when an association has the unlikely goal of foreclosing and owning the homes of delinquent owners. Any association that seeks to recover money due to them while helping a homeowner back to financial stability should look for alternatives to the legal process to achieve that goal.

Attorneys do not do collections. It’s that simple. When an attorney is engaged to do collections work, their plan of action involves filing a lien and foreclosing on a home. During the process, they might see some successful collection events as a result of their actions. Attorneys seldom make outbound calls and do not provide owners with online tools to cure the delinquency.

Collection attorneys are inherently disincentivized to collect on the account. Why? Because their revenue is generated from fees that get charged throughout the process. The quicker they resolve a collections file, the fewer fees will be earned on the account.

Unfortunately, collection files are commonly referred to attorneys because it is the most convenient and familiar solution for an association. This widely accepted practice is extremely disadvantageous to associations and does not put money in the association’s bank account, which is the objective of collections efforts. In fact, associations are often on the hook for legal fees, regardless of the outcome, further increasing the burden and risk caused by the delinquent account.

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Predatory HOA Collection ‘Solutions’ Cause More Harm than Good

Given the growing size and scope of the community association industry, a handful of specialized service providers have appeared to provide collections and/or financing solutions. In non-judicial states, such as California, the foreclosure process does not require legal action, meaning non-attorney firms can handle the task. Much like attorneys, these companies have a fee schedule that highly incentivizes them to push for foreclosure proceedings as quickly as possible.

The longer a file stays delinquent, the further along the process it goes, ultimately ending in foreclosure which generates the most fees for the firm. Again, many of these actions are directly at odds with the desire of the association, which is to recover the money that is due to them, as quickly as possible.

During the last real estate meltdown, a handful of specialized finance companies introduced what was then hailed as an innovative solution designed to mitigate the damage caused by delinquencies. By buying or funding delinquent receivables, these companies promised a much-needed injection of capital to struggling associations. Unfortunately, because they charged exorbitant fees, small debts by delinquent owners would quickly balloon into enormous obligations that made it almost impossible for an owner to catch up.

Given the statutory applications of payments in many states, proceeds were first applied toward the fees charged by the finance companies; associations would often not receive any of the proceeds from successful collection events. This so-called ‘solution’ soon turned from an association lifesaver to an association’s nightmare.

Ultimately, this scheme has proven to be an unfavorable option for community associations.

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An HOA Collection Solution that Focuses on Recovering the Association’s Money

While there are a number of legal or alternative solutions that community managers have relied on in the past to enforce assessment collections, there is little evidence that these antiquated and/or predatory approaches will work to cure delinquencies in the future. Associations today can turn to specialized collection firms that effectively recover funds due to them, without facing the consequences of foreclosing.

Today’s owners face a different dynamic, as an overwhelming majority have equity in their homes, which they will not want to risk losing. For this reason, the best solution is one that incentivizes a quick resolution without burying the association and the owner in unnecessary fees.

Thanks to the introduction of credit reporting capabilities, an owner’s obligations to their association will be placed on the same level of importance as their credit cards, car payments, and mortgages. It is now a viable option to work with collection agencies in lieu of foreclosing and putting people out of their homes, which is the wrong path to take from both the financial and human sides of the equation.

These are times when a community can engage professionals to work out a reasonable means to get these owners back on track and up to date on their obligations. This is not the time to spend good money to foreclose on families and remove them from their residences.

Associations and management companies that embrace technology-based solutions like Axela’s to streamline and improve their collection protocols will find themselves in healthier financial standing and with happier homeowners residing within their communities.

 

Contact Axela Technologies today to learn how easy it is to implement a technology-based collections solution for your organization.

 

 

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New Requirements for Collection of Delinquent Assessments

New Requirements for Collection of Delinquent Assessments

  • Posted: Jul 07, 2021
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New Requirements for Collection of Delinquent Assessments

Robert Kaye, Managing member of Kaye Bender Rembaum, recently wrote an informative and telling article explaining the new collection procedures mandated to be in effect July 1, as a result of  the 2021 legislation. Every board member, manager, and developer needs to be aware of these important changes.

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The Florida Legislature has revised the procedures for collecting delinquent assessments, which add additional steps and delays for the owner to pay before legal action can commence and/or attorney’s fees can be recovered. Senate Bill 56 has revised Sections 718.116 and 718.121 for condominiums; 719.108 for cooperatives; and, Section 720.3085 for homeowners’ associations. With these changes, the collection procedures for all of these types of communities will be substantially the same. The new laws are effective July 1, 2021.

Initially, the new provisions have revised the time for the notices sent by the association attorney for condominiums and cooperatives to 45 days for both the pre-lien first letter and the post-lien notice of intent to foreclose. (Homeowners’ associations were already at 45 days).

The most important and significant addition to this statutory change is the addition of a new notice requirement by associations before they may refer a matter to the association attorney for collection and recover the attorney’s fees involved. This written notice is required to be mailed by first class mail to the address of the owner on file with the association. If the address on file is not the unit or parcel address, a copy must be sent there as well. The association is also required to keep in its records a sworn affidavit attesting to the mailing. The new statute contains a form for that notice which is required to be substantially followed.

As the respective statutory provisions now indicate, associations must incur a minimum of 120 days of collection efforts before a foreclosure action can begin, with a total of three (3) separate required statutory notices. This includes the: (i) initial 30 day notice of the intent to refer the matter to the association attorney (for which no attorney’s fees can be charged to the owner); (ii) 45 days for the pre-lien notice period; and, (iii) 45 days for the pre-foreclosure lien period. As such, in order to best protect the interests of the association, it is recommended that the first 30-day notice be sent at the earliest possible date in the association collection process. This will typically be when the governing documents indicate the assessment to be “late”. Careful review of the governing documents by legal counsel should be undertaken to determine whether there is a specific “grace period” indicated in the documents before the assessment is considered late. Once that determination is made, the board should adopt a formal collection policy that incorporates these new statutory requirements, which will also need to be mailed to all owners. A new provision has also been added that begins with “If an association sends out an invoice for assessments. . .” to unit or parcel owners, such notice is to be sent by first class mail or electronic transmission (email) to the respective addresses for the owners that are in the association official records.

Moreover, if the association wishes to change the method of delivery of an invoice, the new Statute creates specific steps that must be followed precisely in order for the change to be effective. Specifically, a written notice must be delivered to the owner not less than 30 days before the change of delivery method will be implemented. The notice must be sent by first class mail to the address on file with the association. If the address on file is not the unit or parcel address, a copy must be sent there as well. In addition to the notice requirement, the owner must “affirmatively acknowledge” his or her understanding of the new delivery method. The written acknowledgment can be sent electronically or by mail, and must be maintained in the Official Records (although it is not available for inspection by other owners). However, without this acknowledgment, the association may not change the method of delivery. The Statute does not presently include a time frame for the owner to provide that acknowledgment or offer any remedy to the association if none is forthcoming. This can be particularly daunting or problematic when the association changes management companies, when the new company’s procedures differ from the prior company.Before the association attorney can commence any collection work for an association, it will be necessary for the association to provide all of the backup documentation of the compliance with each of these new statutory requirements, as well as the information previously required (such as a current account ledger). If any of the documentation is missing with the initial turnover information, there will be delays in the collection process, which can be detrimental to the association operation. It is therefore imperative that these new procedures are fully integrated into the association operation without delay. We recommend that you contact your Association counsel with any questions on the new procedural requirements to ensure compliance.

Jeffrey Rembaum’s, Esq. of Kaye, Bender, Rembaum attorneys at law, legal practice consists of representation of condominium, homeowner, commercial and mobile home park associations, as well as exclusive country club communities and the developers who build them. Mr. Rembaum is a Certified Specialist in Condominium and Planned Development Law. He is the creator of ‘Rembaum’s Association Roundup’, an e-magazine devoted to the education of community association board members, managers, developers and anyone involved with Florida’s community associations.  His column appears monthly in the Florida Community Association Journal. Every year since 2012, Mr. Rembaum has been selected to the Florida Super Lawyers list and was also named Legal Elite by Florida Trends Magazine. He can be reached at 561-241-4462.

 

 

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Fair Collections Everyone In Your Association Can Smile About

Fair Collections Everyone In Your Association Can Smile About

  • Posted: Jun 29, 2021
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Fair Collections Everyone In Your Association Can Smile About

When a condominium, cooperative, or HOA homeowner doesn’t pay fees and assessments owed to the condominium association, cooperative, or HOA on time, a problem is created for both the association and the homeowner. Associations are forced to act against the homeowner. Homeowners risk losing their homes. It all seems so unfair, doesn’t it?

At Axela Technologies, we believe “Fair is Fair”

Axela Technologies brings order to the chaos and a solution to the problem. Condominium Associations, Cooperatives, and HOAs can count on Axela Technologies to deal fairly with the debtor and assist them in getting caught up with their delinquent fees and assessments. Homeowners have a far better shot of getting themselves back in good financial standing without suffering the consequences of severe legal bills and expenses created when the matter is referred to an attorney.

Axela Technologies is a full-service debt collection agency using modern technology to solve an age-old problem. When home or unit owners stop paying their fees in a timely fashion, the whole association suffers. That just isn’t fair to all of the other homeowners who do pay on time!

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The Unspoken Challenges With Using Attorneys For Collections

Turning the matter over to an attorney conveys to the homeowner how serious their delinquency is. However, it isn’t necessarily the best decision because the attorney does not collect dues/fees. If delinquent payments stem from the homeowner’s financial difficulties, placing a lien on the property hinders the homeowner from selling the property for debt repayment. Buyers will want the lien paid off before closing, and banks are often unwilling to refinance a mortgage or provide a new loan to the owner until the lien is satisfied.

This scenario ultimately impedes the Community association from their goal of collecting delinquencies. Attorneys are useful and necessary but only if all other methods of collections have failed. The attorney will bill the association for their services. Again, the homeowners who do pay on time may be stuck paying that bill, too. That doesn’t seem very fair, does it?

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Fair Collections Are Innate With A Merit-Based System

Axela Technologies not only collects the association’s money, but we perform on a merit-based system. In other words, if we don’t collect from the delinquent home or unit owner, we don’t get paid. Our interests are firmly aligned with the interests of the association.

You might be wondering how we can make such a bold claim and wonder how we get paid for our collection services. Because we specialize in association collections and employ a great deal of technology to assist in our collection efforts, we have become particularly good at what we do. We have reasonable fees that we pass along to the delinquent home or unit owner. We collect our fees from the delinquent owner. It is efficient and effective and, most importantly, FAIR!

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We View Foreclosure As The Last Result

We typically clear up 95% or more of all delinquencies BEFORE the matter needs to be turned over to an attorney for foreclosure. We view foreclosure as the end result of a home or unit owner who simply wouldn’t respond to reason over the course of our collection efforts.

I know this sounds too good to be true but it isn’t! Kindly email, call, or schedule a Zoom conference with a member of Axela Technologies business development team so we can take a closer look at your association’s needs and offer a modern solution for your consideration. After all, Fair is Fair!

 

 

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Condo and HOA Lien Foreclosures…A National Shame by Axela Technologies

Condo and HOA Lien Foreclosures…A National Shame by Axela Technologies

  • Posted: Mar 09, 2021
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Condo and HOA Lien Foreclosures…A National Shame

by Axela Technologies

 

How many times have you read a story about an HOA foreclosing on some unfortunate family for a fraction of the value of the home? For example, the veteran who, upon returning from active duty, finds that his HOA has foreclosed and taken title to his house for a mere pittance? “Soldier in Iraq Loses Home Over $800 Debt” reads the story, and life goes on at the HOA.

Should the HOA have foreclosed on this person’s house? Why did they foreclose on this property? What could have been done to prevent this gross injustice from happening in the first place? Condo and HOA lien foreclosures should not be the first go-to solution when a unit becomes delinquent.

For too long, community associations have been a national disgrace, rather than a source of national pride. No HOA wants their name to be mentioned on the nightly news because we all know it is far more likely to be an exposé than a feel-good piece. But if we want the bad press to stop, we need to take a good, hard look in the mirror.

 

Communities Often Jump Straight to the Nuclear Option of Lien Foreclosure. Can They Do That?

When you buy a house or condo in a community association, most likely you’ve taken out a mortgage, and if you don’t pay your mortgage, the lender has the right to foreclose and force a public sale of the property. So too can condominiums and homeowner’s associations foreclose on your property for non-payment of maintenance fees.

In fact, per most state laws, your homeowner’s association or condominium association can potentially foreclose on your property even if you are current with your mortgage. Also, your mortgage will remain in first position and the HOA cannot sell the property with marketable title unless the first position lien has been satisfied.

All that is required is for the association to cause an attorney to file a lien, have the attorney send a notice of foreclosure, have your day in court, and before you know it you are being evicted from your home that may have equity in it because you were delinquent for a much smaller amount than what the property is worth. Not a good deal for you and certainly not a smart business move for the association.

It’s not to say that the community is in the wrong. The assessment fees are rightfully owed to the association, and they have the right to attempt to collect it. However, jumping to the nuclear option prior to attempting diplomacy (negotiating with the owner to satisfy the debt) never goes well for anyone.

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Winrose vs Hale ‘Shocked the Conscience’ of the Court

In an appeals court decision in Supreme Court South Carolina, the association foreclosure was REVERSED and REMANDED. In the case of WINROSE HOA v. DEVERY HALE the court was shocked by this action and even stated so in their decision: “As a result, in determining whether the purchase price was grossly inadequate …. the bid shocks the conscience of the court.” The story is quite simple and may sound familiar to you as this happens every day and really should not.

The Hales were solid citizens who purchased their home twenty-one years ago for $104,250.00 and paid their mortgage and fees on time. The home is valued at $128,000.00 and the property has $60,000.00 of equity in it. After missing a $250.00 maintenance fee payment the HOA foreclosed on their $566.41 lien (to satisfy delinquent assessments and interest) and the winning bid on the house was $3,036.00. The Hales had been robbed, and the association had acted too rashly in moving to foreclose upon a house for such a pittance. The buyer was Regime Solutions, LLC who are investors that seek out and purchase properties at foreclosures.

Due to the Hales failure to file a responsive pleading to the foreclosure complaint, a huge mistake on their part, they were ultimately defaulted and were not served with any further court papers. In fact, they did not even receive a copy of the judgment of foreclosure. When they found out they were at risk of losing their property, they tried to make good to redeem their house and paid a bill to the master and in fact, the law firm representing the HOA sent the Hales a notice that the lien had been satisfied. The HOA, however, did not withdraw its suit.

Three months after, the HOA filed the affidavit of default and the master authorized a judicial sale of the property at public auction. The Hales were not notified of this order due to a rule in South Carolina, which essentially states the time to appeal doesn’t change, despite lack of notice (rule 77(d), SCRCP). Two weeks later without notice to the Hales, the property was sold and the new owner moved to evict them. This of course led to court complaints, a trial, and finally an appeal before the Supreme Court who reversed and remanded the foreclosure order saying that the sale at auction for $3,036.00 “shocked the conscience of the court,” which is quite strong language from the Supreme Court.

 

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Investors Use Shady Business Practices To Take Advantage of Unsuspecting Homeowners through HOA foreclosures

It came to light that Regime’s business model was not to assume the senior mortgage to own the property but to give back the property to the original owners at a hefty fee. (Sadly, this is not an uncommon practice.)

The court decision went on to say: “While the HOA had the legal right to pursue collection of the debt owed, including foreclosure of the Property to satisfy that debt, this foreclosure action quickly morphed into a proxy to capitalize on a small debt. We are especially troubled by Regime’s participation in a foreclosure proceeding to accommodate its business model of leveraging a nominal debt to secure an exorbitant return from homeowners who fear the prospect of eviction.”

Most important the court stated: “Regime would not have had an opportunity to engage in its questionable business practices had the HOA and its attorney not chosen to pursue foreclosure in the first place. The Hales were minimally in arrears on their HOA dues, yet the HOA foreclosed on a $128,000 home in its eagerness to collect the outstanding $250—an overdue amount less than 0.2% of the fair market value of the home, notwithstanding the amount of the outstanding mortgage.”

Finally, the court opined: “A foreclosure proceeding is a last resort, not a business model to be swiftly invoked for the purpose of exploiting property owners. We do not countenance the improper use of foreclosure proceedings by the HOA, its attorney, or Regime.”

Justice ultimately prevailed in this case, and the Hales kept their house and were not evicted although there can be no doubt that they had suffered and worried throughout this entire process. Not every homeowner who goes through this process is so lucky to get away with only a terrible story to tell.

 

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Communities Are Getting Bad Advice, and It’s Costing Them, in Real Dollars and in Reputation

What went wrong is an amazingly simple question to answer. The association was convinced that they should foreclose on a delinquent unit before they even tried to engage the owners to review the consequences of their situation. While it may be true that they received one notice, they were advised by an attorney that the matter had been resolved. This was a total failure of communication.

The association could have had more contact with the owners and advised them as to the course of action that was being taken against them. Nobody said anything to them – and in this industry, such a thing is not uncommon.

When a delinquent unit goes over to an attorney the object is to “enforce the security interest” and not to collect. The association’s board was not properly informed that less drastic action could be taken. Somehow the board was convinced not to recover money from the Hales but rather to take the property.

No collections activity is reported in the narrative that is presented in the case. It was a bad business decision because eventually, the association had to pay a lot of legal fees. This situation could have been resolved much more easily and cost-effectively.

A Lawyer Who is Just Enforcing Security Interests Is Not A Debt Collector

This matter did not have to be resolved by a “legal solution” but rather by a “collections solution.” As a matter of fact, in a case decided by the Supreme Court of The United States, DENNIS OBDUSKEY v. McCARTHY & HOLTHUS LLP the Court held, “A business engaged in no more than the enforcement of security interests is not a “debt collector” under the FDCPA, 1032*1032 except for the limited purpose of § 1692f(6). Pp. 1035-1040.” This means that the association did not even try to collect the past due debt and if they used an attorney, he/she is not even bound by the Fair Debt Collections Practices Act.

The Supreme Court in South Carolina in all its wisdom said loud and clear: “A foreclosure proceeding is a last resort”

 

HOAs and condo associations should collect, not foreclose

Community Associations Have a Better Option to Collect Delinquent Fees

So how should a community association collect delinquent fees? In a way this question just about answers itself. The answer is that they use a collection agency that is specialized in collections for community associations. Community Associations need to COLLECT, not foreclose and evict owners from their homes. Associations need to have adequate cash flows and a minimum amount of legal cases.

Axela Technologies would be honored to be that company for your community association. We are a licensed collection agency and we only work on delinquencies from Condos and HOAs. We are different because our objective is not to foreclose on a house, which is the action of last resort.

What Axela does is engage the owner and work with them to pay their past due assessments. Axela will send demand letters, provide internet portals to delinquent owners, make outbound calls, report delinquencies to credit bureaus, receive inbound calls, work out payment plans, and notice mortgage holders that the borrower is delinquent on their maintenance fee payments as per the PUD Rider.

Now is the time for your community association management company and/or community association to put the right process into place when you are confronted with delinquencies. Foreclosing and evicting does not have to be the way. Click here to request your free, no-obligation collections analysis today.

 

 

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Condos and HOAs who are forced to collect on delinquent accounts must consider the proper and most important ETHICAL solution. “Ask Mr. Condo” Bob Gourley

Condos and HOAs who are forced to collect on delinquent accounts must consider the proper and most important ETHICAL solution. “Ask Mr. Condo” Bob Gourley

  • Posted: Feb 17, 2021
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Condos and HOAs who are forced to collect on delinquent accounts must consider the proper and most important ETHICAL solution.

by Axela’s “Ask Mr. Condo” Bob Gourley

 

Why Ethical Collections Really Matters for HOAs and Condominium Associations

What happens if 5% or more of the members of a condominium association or HOA don’t make timely payments to the association as expected? What if one or more homeowners stops contributing altogether? How can condominium associations and HOAs protect themselves while not playing the role of the villain in the eyes of the delinquent homeowners? Here is the argument in favor of ethical collections.

What is in the best interest of the association or the delinquent homeowner?

No one can question the need for a condominium association or HOA to act against delinquent owners within their association. After all, successful collection and distribution of common fees and assessments are the only way a condominium association or HOA can survive. Budgets are prepared annually. On one side of the budget are all of the known and anticipated expenses, contributions to Reserve Funds, and other expenses the association will face in the upcoming year. On the other side of the budget are the income items to pay for those expenses, namely the anticipated income from common fees and assessments from individual homeowner and unit owners within the association. A balanced budget can only be maintained if both sides of the equation are accurate.

Condominium associations and HOAs are typically not-for-profit businesses. The governing documents that create the bond between the unit owner and the association usually give the association serious clout when it comes to collecting common fees and assessments in a timely manner. Additionally, many associations engage an attorney to assist them in contract negotiation, interpretation and modification of governance documents, and much more. It’s not surprising, then, that many condominium associations and HOAs simply turn to their attorney when it comes to matters of collection of delinquent common fees and assessments. But boards should be asking themselves, is that wise? Is that in the best interest of the association or the delinquent homeowner? Is it the best way to protect the association’s assets and actually collect the money it is owed? Is it ethical?

 

The goal should be to educate delinquent homeowners and help them get current

There are several reasons that a condominium or homeowner can become delinquent. The simplest reason is that they simply don’t have enough money to pay all of their bills. Credit card bills, utility bills, car payments, and even the mortgage all need to be paid. There are perceived repercussions from missing any of these payments, including having utilities turned off, a car repossessed, or a foreclosure action from missed mortgage payments. For these reasons, a person who is short of cash might make the decision to defer or miss payments on their common fees or assessments for the simple reason there doesn’t appear to be any repercussions from doing so. It is a mistaken notion that is all too common. Other reasons include an owner’s death or severe illness, a lack of receiving or paying attention to communications from the condominium association or HOA, and even plain forgetfulness.

Whatever the reason, once the unit or homeowner gets behind in their common fees, the goal should be to educate them and get them back up and current so that their lack of payment doesn’t hurt the other association members who are paying on time.

 

Legal fees can even outweigh the amount the homeowner owes to the association

There is a huge difference between attempting to collect a debt and simply taking legal action against the debtor. Both have very real consequences to both the condominium association or HOA and the delinquent homeowner. Simply referring the matter to an attorney isn’t an attempt to collect a debt. It is an action that will lead to a lien and eventual foreclosure if the debt isn’t settled. Used as a first resort, it is an unethical solution because it harms the homeowner and puts the association at risk of losing additional money as the attorney will get paid for the legal work regardless of the outcome.

Since the delinquent unit owner is encumbered to the terms of the association’s governing documents, the hefty and often burdensome cost of the legal fees is also lumped onto the delinquent amount the homeowner owes to the association. In some extreme cases, the legal fees can even outweigh the amount owed to the association. Can you blame the delinquent unit owner for crying “foul” when this happens? It is unfair and unethical.

 

A specialized collection agency can work with the homeowner without threatening to foreclose

A far better and less expensive solution would be to work with a specialized collection agency that fully understands the plight of the condominium owner or HOA homeowner who has missed a few payments and become delinquent.

Axela Technologies is just such a collection agency. In addition to offering a no upfront cost to the condominium association or HOA, the fees for using a collection agency to service the debt is far more agreeable to the delinquent homeowner. They have the opportunity to address their delinquency and get themselves back in good standing with their association. A specialized collection agency can work with the homeowner politely and professionally, encourage a repayment plan, without involving the courts or threatening to foreclose on the homeowner’s home unless, and only unless, the debtor is unwilling to resolve the debt.

 

95% of delinquencies are settled without the need for the hefty legal expense of an attorney

In our experience, that is a rare occasion that only happens about once for every 20 accounts referred. That means up to 95% of delinquencies are settled without the need for the hefty legal expense of an attorney. Not only is this solution far less expensive for all concerned, it’s also a far more effective method of collecting delinquent common fees and assessments.

An ethical collection strategy needs to be considered in all cases of homeowner delinquency and not just because it is the right or ethical thing to do. Many associations have felt the bitter sting of financial loss after pursuing a strictly legal “lien and foreclose” strategy. Savvy homeowners who get swamped with legal fees on top of delinquencies are far more likely to file their own bankruptcy leading to the association simply “writing off” the delinquency and the legal fees spent trying to collect.

Using Axela Technologies and their ethical collections strategy proves effective 19 times out of 20. Ethical collections save time, save money, and encourages a “win/win” for the association and the homeowner. Take a look at your current condominium association or HOA collections strategy today. If it isn’t ethical, it’s time to talk to Axela Technologies.

 

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Collections Tools for Self-Managed HOAs & Condos by Bob Gourley @Axela Technologies

Collections Tools for Self-Managed HOAs & Condos by Bob Gourley @Axela Technologies

  • Posted: Jan 28, 2021
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Collections Tools for Self-Managed HOAs & Condos

by Bob Gourley @Axela Technologies

 

When a condominium association or HOA makes the decision to self-manage, the Board of the association often must make difficult decisions about what to do themselves and what functions to outsource to third-party entities. What you need are the tools for collections for your self-managed condo or HOA.

Collecting common fees and assessments is the only way a self-managed association can fund itself and provide the goods and services to homeowners called for the association’s governance documents. Defaulting on these provisions is not an option. Ideally, all unit owners within the association remain solvent and pay their common fees and assessments on time. But what happens when they don’t? What tools are available to a self-managed condominium or HOA?

 

The High Cost of the Traditional Collection Method

Traditionally, collection of past-due common fees and assessments required hiring an attorney to represent the association in bringing forth a lien, and, if needed, a foreclosure action. While this approach can bring the association the title to a delinquent unit owner’s home, it isn’t always a profitable or even practical solution for the condominium or HOA.

Hiring an attorney creates additional risk in the form of legal fees that the association is bound to pay, regardless of the outcome of the legal actions. A well-intentioned association could very well spend more money than it could ever hope to receive in an attempt to collect past due monies they are owed and need to operate their associations.

 

New, Technology-Based Collections Tools for Self-Managed Associations

Axela Technologies decided to address the problem of common fee and assessment delinquency in a different and modern manner. As a full-fledged collection agency, Axela Technologies is able to offer true assistance to condominium associations and HOAs that find their budgets in jeopardy due to deficits created by delayed or delinquent common fees and assessments.

Charging no upfront money to the condominium association or HOA, Axela Technologies takes on the risk that would have been incurred by the expense of an attorney. The cost of using Axela Technologies is minimal and is passed on through the delinquent homeowner once the account is outsourced for collections.

This is an optimal situation for the association, and, to some extent, the delinquent homeowner, who is provided an opportunity to pay his common fees and assessments without having the onerous legal fees of an attorney added to his or her outstanding balance. The association minimizes risk and does not have to pay any fees to Axela Technologies. Additionally, Axela Technologies boasts a very high rate of successful collections, with only 5% remaining delinquent and requiring the use of an attorney to bring a foreclosure action against the delinquent homeowner.

Keep in mind that a foreclosure action still doesn’t guarantee a positive outcome for the self-managed condominium association or HOA. All the foreclosure action will do is gain title to the unit or home. It still needs to generate income, either through sale or rental, before the association may see some financial relief. While the attorney may assist in the foreclosure action, Axela Technologies will keep a vigilant eye on any surplus funds or other possible recovery for the condominium association or HOA. The goal is full recovery with minimal risk for the association.

 

Outsource Collections to Reduce Risk and Maximize Debt Recovery

Unless a self-managed condominium association or HOA is so well-funded that financial risk is of no concern to them, they would be well advised to outsource their collection efforts. Further, unless a self-managed condominium association or HOA wishes to risk spending money on legal fees, they would be well advised to outsource their collections to Axela Technologies. Axela Technologies’ history of successful condominium and HOA delinquency collection with no upfront cost or risk make them the easy choice.

The fact that their collection costs are far less than the legal fees charged by an attorney makes Axela’s collections tools a better choice, not just for the community, but also for the delinquent homeowner, giving them a much more likely chance to pay their delinquent fees and assessments to the association. Outsourcing collections to Axela Technologies is about minimizing risk and producing a successful outcome for all involved.

 

Learn more about Easy Collect, Axela’s collections solution for community associations here.

 

Need a Better Cash Flow for Your Condo or HOA?

YOUR COLLECTIONS PROCESS MAY BE WHAT’S HOLDING YOUR BUDGET BACK. LET US HELP WITH THIS FREE ANALYSIS.

A poor collections process can lead to a number of negative symptoms for a community association, from budget shortfalls to never-ending legal fees to loan denials for capital improvements. If your community is suffering, you may be looking in the wrong place for the right solution.

Axela Technologies specializes in community association collections. Our experts have years of CAM industry knowledge, combined with a deep understanding of collections processing.

Learn More!   In just 30 minutes, our experts will work with you to identify the areas in your current collections process that are not working, and give you actionable advice on how to improve your current process, increase the amount you are collecting, and save your community money.

Fill out the form to set up your free collections analysis now. Your analysis is completely free, and you are under no obligation to take any action.

It’s time to take a good, hard look at your collections process. Your community members, your board, and your budget will thank you!

 

 

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Axela Technologies Secures Series A Financing Round Led by Blueprint Equity by Mitch Drimmer

Axela Technologies Secures Series A Financing Round Led by Blueprint Equity by Mitch Drimmer

  • Posted: Jan 25, 2021
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Axela Technologies Secures Series A Financing Round Led by Blueprint Equity

by Mitch Drimmer / Axela Technologies

MIAMI, January 19, 2021 (Newswire.com) – Axela Technologies, the nation’s leading provider of collection services to the Community Association Industry, announced today that it has received a minority growth equity investment from Blueprint Equity. The amount of the deal was not disclosed. In conjunction with the investment, Blueprint Equity will join the Board of Directors.

Since launching in 2018, Axela has demonstrated the effectiveness of its software solutions that manage an association’s collection files. Unlike traditional attorneys or collection agencies, Axela deploys a multi-touch, digital-first approach to engage and work with unit owners that have fallen behind on their assessments.

“Resorting to legal action and foreclosure should be the absolute last step to any collection effort,” states Martin Urruela, Axela Founder and CEO. “Yet for years, it’s been the knee-jerk reaction by community associations when a homeowner falls behind on just a few months of assessments. It doesn’t have to be so drastic and costly, and that’s where we come in.”

The financing round builds on an exceptional year for Axela, which saw its customer count grow by over 200% in 2020. The company currently works with hundreds of management companies in 21 states, and boasts a 99% success rate of resolving collection files without resorting to legal action.

“What really stuck out to us was Axela’s approach to collections, long considered an unattractive and confrontational industry,” said Sheldon Lewis, Managing Partner of Blueprint, who also joined the company’s Board.” Axela was built around a philosophy that by helping the homeowners, they help the association, and everybody wins. Powered by the right technology, the company is well-positioned to scale across this vast market and become the industry standard.”

When asked about the use of the investment funds, Urruela stated that the company would aggressively expand its sales and marketing efforts, as well as double down on product and engineering. “We have to get the word out that we have a new and innovative solution to an age-old problem. We’re extremely proud of our customer retention rate – we’ve never lost a client, or experienced a scenario where an association decides to go back to the old way of doing things after working with us.”

 

ABOUT AXELA TECHNOLOGIES

Axela Technologies is a collections firm that specializes in recovering delinquent assessments for the benefit of community associations. Axela reduces the cost of outreach and engagement by automating much of the standardized collections process, all while providing exceptional customer service and a centralized platform for all stakeholders to promote transparency and efficiency. To learn more about Axela, visit axela-tech.com.

 

ABOUT BLUEPRINT EQUITY

Blueprint Equity provides expansion capital to rapidly growing enterprise software and technology-enabled services businesses across North America. To learn more about Blueprint Equity, visit onblueprint.com.

 

 

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Why A Specialized Collections Company Makes Sense for Your Community Association by Axela

Why A Specialized Collections Company Makes Sense for Your Community Association by Axela

  • Posted: Nov 19, 2020
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Is a Specialized Collections Company Right for Your Association?

Is your Condo or HOA tired of paying lawyers thousands of dollars to recover hundreds of dollars, less, or even nothing. Well, it’s time to think out of the box and let professional collectors recover that money for you.

by Mitch Drimmer /Axela Technologies

In good times or bad times, community associations (Condos and HOAs) will experience some level of delinquencies that affect the entire association. As a not for profit business your association depends on timely payments every pay period to maintain services to members of the association.  Failure to effectively act on a delinquent account does a disservice to the community and to the delinquent member as well.  By allowing a member to sink deeper and deeper in debt, the association only makes it more difficult for them to remedy their problem.  Engaging a Legal Process (sending the file to your community association attorney) the association may just be incurring additional expenses that eventually will be paid for by the good-paying owners.

Often HOA boards of directors are reluctant to migrate their delinquencies to collection agencies from their community association attorney. This article looks at the key benefits and concerns regarding collection agencies for community associations, examines the current state of collections, and helps associations understand why a specialized collection agency for community associations offers tremendous opportunity to collect their money at very no cost and no risk.

 

The Promise of a Specialized Collections Company

Almost every community association looks towards their community association attorney to manage their delinquencies. Yet community association attorneys are not prepared to do the work necessary to effectuate collections (outbound calls, credit reporting, skip tracing, dedicated inbound call center), and the costs are usually beyond what they recover.  Collection agencies have traditionally been performance-based and will collect their fees and costs only upon a successful collection event.  Collection agencies are concerned with only one aspect of business and that is the successful and cost-effective recovery of maintenance fees and other charges that may appear on the ledger (fines & violations, special assessments).

Operational Excellence and Reporting

The most important feature of an enterprise-level collections solution is its ability to communicate with delinquent owners.  Both inbound calls and outbound calls must be managed by highly trained and accredited specialists. When seeking out a collections company for your HOA ask if there is a dedicated portal for delinquent owners to resolve their issues. Boards of Directors and their management companies need to have access to clear and legible reporting.  Payment applications must be handled according to governing documents and state statutes. Strict compliance with Federal and State consumer rules and regulations is imperative.

Cost Savings

Community Association law firms require payment regardless of the outcome of the file. These costs often are beyond the amounts recovered.  Collection Agencies are merit-based and are only paid upon a successful collection effort.  In the specialized field of collections for community associations boards of directors should not, and in some cases, cannot allow any portion of their maintenance fees to be allocated as boards must be faithful to their association’s budget.  Fees and costs of collections should be charged and passed through to delinquent owners, and in the case of an unsuccessful collection effort these fees should not become the burden of the association (including costs for filing a lien)

 

Concerns Regarding Collection Agencies

It’s easy to see why these key features are the motivators for moving your collections to a specialized collections company and away from a community association attorney.  Yet, many boards of directors are reluctant to change what they have traditionally done in the past, and of course, they will be advised by their own counsel not to remove a collection file from their firms.

FDCPA, TCPA, & FCRA Compliance

Any vendor who performs services for a community association must have the proper insurance to protect the association from liability.  Violations of consumer protection laws should be a great concern.

  • Know and be in compliant with Federal and State Regulations.
  • Report delinquencies to credit bureaus in compliance with the FCRA.
  • Ensure all telephone calls are following TCPA regulations.

A community association must perform their due diligence and be sure that their collection agency is not only bonded but properly insured.  Associations should also be concerned that the customer service representatives of the collection agency are professionally trained and have designations from collection industry trade organizations such as ACA (The Association of Credit and Collection Professionals).

Statutes & Governing Documents (CC&Rs)

Of significant concern to community associations should be a collection agency’s adherence to governing documents and state statutes that relate to condos and HOAs.  Payment application, timelines, statutory compliance to the lien process, and notification are of paramount concern to community associations, especially regarding collections.  Zero defect execution of the collections process must be the standard practice. Collection agencies need to:

  • Perform flawless underwriting of each ledger.
  • Verify property ownership.
  • Impeccably review governing documents and by-laws and understand the state statutes where they are doing collections.

 

Conclusion

With increased scrutiny of the collection industry, it is more important than ever for community associations to engage the right company with the most sophisticated technology that can support their missions.  They should:

  • Compare and document standards, guarantees, and performance levels to ensure that prospective collection agencies are truly best-in-class solution providers.
  • Ask for collection agency references and connect with these references to get a true feel for the providers’ service, product and

It is also imperative that community associations increase efficiency, transparency, and reporting to members of the community.  Collection Agencies that specialize in working with community associations are the best way to go.  The right collection agency just makes sense for communities – Do not allow delinquencies to erode your community.

About Axela Technologies

Axela Technologies is a licensed collection agency exclusively serving community associations in the United States.  Axela Technologies realizes that in the field of collections, community associations have been an under-served industry.  By offering their core product Easy Collect ™ to community associations Axela Technologies has recovered millions of dollars that community associations might have otherwise written off. Give Axela a call today and get a free no-obligation collections analysis today to see if a specialized collections company is right for your association.

 

Axela-Technologies

Axela leverages technology to substantially reduce the delinquency rate in your community associations by increasing efficiency

We Make the Collection Process Efficient

 

 

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