Reporting to credit bureau - has it worked for your HOA?

Our HOA is considering signing up for one of the companies that report to the credit bureau and would love to hear how well this has worked for other HOAs?

Also, do you report on-time owners to provide a positive incentive as well as those who are behind?

The reason we are considering this is that we consistently have a lot of very delinquent HOA members who do not respond to letters from the HOA or even being placed for collection with an attorney. Most start to pay after we get to the foreclosure stage but we were thinking some other measure early on - like reporting to the credit bureau - might be more effective.

Also, we consistently have a lot of members who are several months behind. (we highly encourage automatic payment by draft)

Thanks much in advance for sharing your HOA's experience.

Not a good idea. Lien or foreclosure better options. The HOA has no rights to have the person's Social Security #. So that has to be a different process to report to credit than using social security #. Even worse idea is to sue the person. It has no teeth on it.

So make a policy like 6 months you lien, 1 year CONSIDER foreclosure. (Whatever works for your HOA). Having a policy in place so people know when they are subject to lien or foreclosure makes it much easier to enforce actions.

Legal judgements have teeth.
Therefore, not having teeth must be an issue in some States, but not all.

Additionally, in some States, you need to go to court to foreclose.

May need a cost analysis.

If your HOA always gets the dues, either on time, late, or via lien at closing, then it may not make sense to pay an entity to enter the owed amounts.

Now, if you have found that legal expenses of liening and follow up on closings is expensive, this might be an interesting way to offset.

This does beg the question: What would HOA debts be different than any other kind of debt?

Then, back to the what is it worth?

Or, what happens when the HOA screws up and misreports something and it affects someone's credit rating, and that someone takes the HOA to court? Or, simply shows the HOA screwing up ...?

We also have a lot of people who are 2,3,4,5,6,7 months late. The theory is that if you nip it in the bud and don't let people get very far behind, many will never get so delinquent.

Yes, it has worked well for our community. We file liens, report to the credit agency, and most people pay as soon as they realize their credit report will be adversely impacted.

I really don't believe reporting to the credit bureau has much or even the desired effect. If you actually do your research and not fed a sales pitch from a company, you may find that out. Considering the HOA isn't allowed access to one's social security number, it makes it much different route to follow filing. Plus how many points would it actually damage on one's report? Enough they can't buy a car or get a second mortgage? It may not be a lot of points. Plus what if they decide to file bankruptcy? Pretty much can wipe what is owed the HOA legally off the map...

Just saying you do NOT need a special company to collect the money. You may need a Management company to help with finances. However, even with filing a lien you just may need a lawyer or legal service. Do your research a bit more than jumping into the "easiest" surface solution. Which I believe this to be in the long run.

Sounds like the simple statement on the billing notice might be helpful.

Brett - can you give us a rough order cost estimate per filing each time with the credit agency?

John,

Good points.

An interesting no-cost approach might indeed include a warning wrt credit agency reporting ... perhaps it would help encourage some percentage at no cost to the HOA - and, be no different than any other corporation.



Murrells Inlet, SC 29576

Collection Policy & Procedure

1. Annual assessments are due on January 1st. Our documents state they are payable in 12 equal payments, due on the first of each month.

2. Failure to make the monthly payment within 30 days will result in a late fee of $15 being added to the account for each 30 days of delinquency as per our AMMENDED DECLARATION OF RESTRICTIONS AND COVENANTS FOR xxxxxx xxxxxx, Article V, Section 6: Paragraph (b).

3. A ‘courtesy contact’ will be attempted, but not guaranteed, before imposing a late fee.

4. Failure to remit payment for 90 days will result in the lien being recorded against the property with the Register of Deeds Office, located in Conway, SC.

5. Failure to remit payment for 180 days will result in the account being “sent to collections” through Spring Forest’s attorney at YOUR eventual expense.

6. Failure to collect by 360 days will result in Foreclosure on the Lien.

PLEASE DO NOT LET YOUR ACCOUNT BECOME DELINQUENT
By unanimous affirmation 4/12/2017,
Board of Directors, , Inc.