Homeowner Privacy Re Delinquent Accounts

I am in my second year as treasurer of an HOA in KS with 211 single family units. We have a Board of three. All Board members have been involved through this situation and share my concern:

Recently our Board decided to initiate a project that would require a decision to either increase dues, ask for a special assessment, or pursue a bank loan or line of credit. We currently have a loan through a local bank that was taken out in 2007 and is almost paid off. I spoke with the lending officer about what our options might be. I did not sign anything or formally request a loan. He was given verbal permmission to obtain HOA financial information from the accountant at our management company. I asked to be copied on all e-mail or other correspondence that occurred between them.

In the past few days, I saw the bank request previous tax returns and our latest financial statement. No problem. Yesterday he e-mailed me personally asking for delinquency information which I also thought was fair. I responded to the best of my knowledge with current figures, and told him I was reluctant to send him the report I receive because it contained homeowner names and intent to lien or collection information.

To my surprise, he contacted the accountant after receiving my e-mail, did not explain to me why or what information he needed in addition, and she sent the very report I felt would be in violation of the homeowners privacy. When I spoke with her on the phone about my concern, she told me the management company frequently did business with the bank, and "this is what we always do".

Is this type of information sharing between HOA management companies and banks/lending institutions a violation of homeowners privacy? Am I being reactionary? It seemed common sense to me that at a minimum, the homeowner's names would be redacted. Your advice and comments would be most appreciated.

Thank you.

Thanks, Richard, for your reply. It must have been my fault for assuming that the management company would show more discretion. I hope others will weigh in with their thoughts. You're right, if the management company had contacted us, we would have made sure that individual's names were not included. That is why we have "executive sessions" when our board meets. I know that medical information is very protected under the law. It doesn't seem that financial information has the same protections.

Sandy

When you go out and purchase a house and apply for a loan, you are required to provide to the lender much information, such as social security number, credit report, etc, BECAUSE you are signing a document to repay that obligation. Same thing goes for a HOA loan. The corporation is signing a document promising to repay that loan. How are you going to repay that loan, with assessments of course. Some may ask for a detailed list, some may not. BUT, it's their money to loan and their terms.

When an HOA is asked by a lender on behalf of a borrower wanting to purchase a home in your community, how many or what percentage are delinquent. But then again, the HOA is not promising to repay the loan on behalf of the HOA.

Again, as a management company, I would have informed the Board what information I was providing on their behalf.

The names of delinquent homeowners who are behind on mortgage payments, their information is posted on our front gates as part of public notice.

What privacy?

John

My point was that there is no privacy in regards to delinquencies, whether HOA dues or mortgages.

I served as treasurer on my Board and I know the feeling! This was an interesting conversation - I'll pass this one to our Board. This is a good thing to know if it ever decides to take out a loan.

As for the public shaming by revealing delinquent homeowners, I personally don't think that works. These days, too many people don't see anything wrong with running up a bunch of bills and then bailing or declaring bankruptcy. It's one thing if you ran into financial trouble because of job loss or major medical illness, but I find people always seem to have money to go out to the club, satellite TV, etc. That's probably why you see all these ads from bankruptcy attorneys yapping about how easy it is to become debt free or those tax assistance companies who promise to get you out from paying debts to the IRS that "you can't afford to pay."

Even if you knew who wasn't paying, what would your next move be? Go to the person's house and demand payment? You really want to do that in this day of people shooting other folk for whatever reason or just because they want to kill themselves and take as many people with them as possible???

You should not give delinquent information specific to an individual homeowner to any bank. This information is none of their business. If the bank wants to evaluate the credit worthiness of an applicant they would be correct to inquire where an applicant has applied for credit...this should not be your HOA. Your HOA is not an institution offering revolving credit to the members. Sharing delinquent information on an individual homeowner outside of your association may not even be legal, unless you record a lien on the property...then it becomes public notice for anyone on earth with a computer to look at.

As for the members of your association, I am of the opinion that as members they have a right to know this information as it is part of association records. In my opinion, nothing good could ever come of knowing who is delinquent, unless the delinquent homeowners were board or committee members. By keeping the information private and not having rules in place that preclude a member from serving as a board or committee member unless they are current on their dues, actually gives the board members a way to potentially hide when they do not pay their dues...and then tell you they don't have to share the information with you.

Not common, but possible. Unfortunately, this can certainly happen in my HOA.

I should think that APN#s of each delinquency, j how much, how long, etc., would be enough for the bank.