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Friday, Dec. 3, 2010 | 2:05 a.m.
Three homeowners association collection companies are seeking a temporary restraining order to stop a state agency from, in essence, limiting how much they can collect in delinquent fees on foreclosures.
The lawsuit filed this week by Nevada Association Services, RMI Management and Angius & Terry Collections is in response to an order and advisory opinion handed down in November by George Burns, commissioner of the Financial Institutions Division, which regulates collection companies.
That order, sought by investors who buy foreclosure homes at courthouse auctions, limited collection companies to collecting nine months of delinquent assessments only. Traditionally, collection companies have tacked on their fees to the nine months of delinquent assessments as allowed in state law, but the ruling said that can’t be done.
The collection company practice prompted complaints from investors who argue they are overcharged, especially because fees can run thousands of dollars in some cases.
With the order, collection companies feared that the Financial Institutions Division would revoke their license or penalize them in other ways if they didn’t comply.
A date for the hearing hasn’t been set in the District Court. It will be handled by Judge Jennifer Togliatti.
The collection companies and their legal team are crying foul that investors are doing an end run around ongoing arbitration that resulted from earlier lawsuits filed by investors against collection companies and HOAs.
An arbitrator has sided with investors, but the ruling isn’t binding and the issue is likely headed back to District Court and ultimately the State Supreme Court.
Collection companies claim that although Burns is commissioner of the Financial Institutions Division that regulates them, the issue of collections as it relates to foreclosures should be an issue only considered by the Nevada Real Estate Division.
Nevada Association Services President David Stone said his group is talking with state officials about withdrawing that opinion and order.
“We were blindsided by this,” Stone said. “I don’t think the commission did it intentionally to hurt anybody, but they overstepped their bounds and didn’t realize the fallout from this. Our position is they don’t have jurisdiction.”
James Adams, the attorney for the investors, said the Financial Institutions Division “absolutely has jurisdiction” because they license the collection companies.
“My understanding that even though it’s advisory, an agency decision is binding and if they violate it, their license can be revoked,” Adams said.
"The recent complaint filed by Nevada debt collectors against Commissioner George Burns is both a cowardly and desperate attempt to redirect attention away from the debt collectors' own despicable collection practices," said Adams, who called it a smear against Burns.
Collection companies maintain that if they must take their fees out of the nine months of delinquent association dues, it would hurt HOA budgets already strapped by the nation-leading rate of foreclosures in Las Vegas.
They argue a previous decision in District Court sides with HOAs and collection companies.
Investors argue state law limits the collections to nine months and the added fees are hurting their ability to invest and improve properties. Collection companies accuse investors of being greedy and only wanting to enhance their profits.
“I don’t think the general public understands that if you live in a homeowners association and follow the rules, you should be concerned about this,” Stone said. “It will hurt you if investors have their way.”
On Dec. 7, the Common Interest Communities & Condominium Hotels Commission will decide whether a cap should be put in place on delinquent fees that collection companies can collect on behalf of HOAs.
Homeowners associations are just another unnecessary level of taxation and bureaucracy.
Sure, they can collect, but what money though? If people lost their jobs, what should they give them?
This is a bigger reason than most think, as to why people are sitting on the sidelines. I wouldn't buy a house until this has been solved in court, because it could cost thousands of dollars at the time of purchase.
It's not bad enough that they (HOA Collection thugs) kick you when your down, but then go through your pockets and take what ever little change you have left.
What's even a bigger surprise is when a home is purchased in a HOA neighborhood, the NEW owner get's a surprise that thousands of $$'s are due on unpaid HOA fees and Oh, by the way, you owe us $$ too for collecting for the HOA's.
What happen to the days when a person could just buy a home and not have to pay "protection"?
I rarely comment but feel the need to.
The average HOA dues in this town are probably less then $50 a month. At 9 months that is only $450 to collect. I went through what the collection company charges and what the collection company actual costs to file leins and other items. The $450 does not even cover the costs of filing liens, mandatory certified mailings, and releasing lein costs or the additional costs of going through the process all the way to foreclosure. These costs are paid out by a collection company to places like the US mail, assessors office and other services beyond their own.
If an HOA could only collect after even just costs most HOA's would collect nothing on a house that probably went 24 months without paying any dues. If nothing could be collected then who is going to pay? I will tell you everyone that has been good and is continuing to pay their bills as the HOA would have to raise the assessments or cut services that are demanded to keep a property looking good.
With the majority of houses being baught by cash (investor purchases) not allowing collection costs be part of it is going to hurt the average folk and no one else.
Yes there should be caps on the charges a collection company can charge so it does not get stupid in fees but beyond that this is a service that needs to be done otherwise everyone would want services but not pay for them.
Reasonable is the key word. HOAs should be able to collect fees for services. One problem is some managers abuse the system by getting kickbacks from those contracted to do work and drive up fees. We had a manager who postponed repairs and ended up getting our HOA sued for injuries, driving up fees.
BTW: Collection agencies do not always play by the rules. We had 3 harass us with illegal calls to our home and business claiming that my husband was responsible for his mother's bills after she died. One of these bills was over 23 years old and discharged in a 1984 bankruptcy. Two threatened to seize our assets and/or take us to court. Another tried to claim that my husband was married to his mother and he was responsible for her bills. Reporting these thugs to anyone in NV is a waste of time. We could never get anyone to investigate.
oxymoron = Collection companies accuse investors of being greedy and only wanting to enhance their profits.
I don't see that saying if you live in a HOA you could be hurt by this if the investors get there way, That was intended to bring in as many people as possible to confuse this whole thing.
The HOA sold the accounts off so the HOA got what They wanted so how does that hurt anyone else?
And if you go to purchase a home find out how much is owed and then adjust the purchase price accordingly and the liens will be paid at closing.
Buying those accounts from the HOA's is like buying stock sometimes you make money and sometimes you don't.
These agency's knew how much it cost to file the liens and make calls and so forth they knew that going into it noone forced them to make that there business model, And to be quite frank they created this by there inflated fee's along with there unsavory way of conducting business.
Amen, casinokid.
Right on the MONEY!
VULTURES.
Everyone that says HOA's sell off the accounts to collection companies is untrue. What happens is HOA's by state law under NRS 116 can send an account to collections and the cost of collections is on the account holder, not the HOA. Collections works different with HOA's as they are specialized collection companies and not general medical, credit card or other collection companies as the laws are different. All these agencies are based on HOA collections only.
I suggest before making statements totally based on tho
HOA's budgets are based on only revenue from assessments. Then there is a line item for bad debt. If that bad debt line item grows to big it has to be covered by increasing assessments to balance the budget. HOA's must work on balanced budgets as well. Even holding rainy day funds are to a certain level illegal for an HOA to do.
Investors are not complaining about paying the past HOA dues, they are complaining about the massive collection fees tacked on to what is owed. I've seen cases where $800 in past dues is turned into over $2,000 after collection "fees" and penalties are added.
It's not that complicated...
I've got a good idea - if you live in an HOA community - Pay your fricken dues.... and if you lose the house then the bank who holds the mortgage should pay the fricken dues. It takes money to keep up a nice community - why shouldn't the homeowner and/or bank pay their share? Doesn't it benefit the bank - doesn't it help them resell the house after it's been foreclosed on if the community is in good repair? All this would be a moot point if people took responsibility and paid their fricken bills.
@ azsk8fan,
Here is a blog post that explains the situation:
http://lasvegasrealestate4u.com/2010/12/...
It's not about the actual dues owed that is at the center of the problem... it's the fees tacked on.
In the example in the blog post above, dues owed were $448 and added on "Collection fees, late fees, etc... were $665 for a total of $1,113.
Also read the example of where a buyer / investor was asked to pay over $13,000 for past HOA dues, fines, collection fees, etc, etc, etc...
Which ended up killing a sale and the blighted home was allowed to blight the community for another seven months.
The Las Vegas Sun needs to do a little bit better of a job explaining the situation in question.