Why a specialized Collections Company Makes Sense for Your Community Association

Written by Mitchell Drimmer on . Posted in COLORADO COMMUNITY ASSOCIATION COLLECTIONS, COMMUNITY ASOCIATION COLLECTIONS WHITE PAPER, COMMUNITY ASSOCIATION COLLECTIONS, CONDO COLLECTIONS, CONDOS, FLORIDA COMMUNITY ASSOCIATION COLLECTIONS., HOA COLLECTIONS, HOAS, MARYLAND COMMUNITY ASSOCIATION COLLECTIONS, SNAP COLLECTIONS, VIRGINIA COMMUNITY ASSOCIATION COLLECTIONS, WASHINGTON D.C. COMMUNITY ASSOCIATION COLLECTIONS

Why A Specialized Collection Company Makes Sense For Your Community Association

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 of sink deeper and deeper in debt the association only makes it more difficult for them to remedy their problem.

By 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 boards of directors are reluctant to migrate their delinquencies to collection agencies from their community association attorney. This paper 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 offers tremendous opportunity to collect their money at very little cost and 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, 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 effort.  Collection agencies are concerned with only one aspect of business and that is the successful and cost effective recovery of maintenance fees

 

Operational Excellence and Reporting

 

The most important feature of an enterprise level collections solution is their ability to communicate with delinquent owners.  Both inbound calls and outbound calls must be managed by highly trained and accredited specialists.  Boards of Directors and their management companies need to have access to clear and legible reporting.  Payment application 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 these fees should not become the burden of the association (often third party costs for filing a lien will be the responsibility of the association).

 

Concerns Regarding Collection Agencies

 

It’s easy to see why these key features are the motivators for moving your collections to a collection agency 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 away 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 compliance with Federal and State Regulations.
  • * Report delinquencies to credit bureaus in compliance with the FCRA.
  • * Insure all telephone calls are in compliance with TCPA.

 

This is why 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 properly 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, time lines, statutory compliance to the lien process and notification are of paramount concern to community associations especially in regards to collections.  Zero defect execution of the collections process must be the standard practice. Collection agencies need to:

 

  • * Perform flawless underwriting of each and every ledger.
  • * Verify property ownership.
  • * Investigate mortgage holder of property.
  • * Impeccably review governing documents and by-laws of association.

 

Conclusion

 

With increased scrutiny of the collection industry, it’s 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 support.

 

It’s 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 – Don’t allow delinquencies to erode your community.

 

About Association Financial Services   

Association Financial Services is a licensed collection agency, and specialty finance company exclusively serving community associations in the United States.  Association Financial Services realizes that in the field of collections, community associations have been an under-served industry.  By offering their core product SNAP Collections to community associations AFS has recovered millions of dollars that community associations might have otherwise written off.

 

 

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Mitchell Drimmer

Mitch Drimmer and SNAP Collections by Association Financial Services have become synonymous with collections success for community associations. SNAP Collections by AFS has grown to be a national company offering its services nationally. Mitch is a licensed community association manager, real estate broker, and has three collection certifications from various industry organizations. Mitch is on the advisory board of Florida Community Association Professionals (FCAP), a content provider for the FCAP educational program, and frequently writes articles for various publications dealing with issues in community associations.