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February 1, 2015

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HOA collectors want end to cap on delinquent fees on foreclosures

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.

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  1. 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?

  2. 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.

  3. 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.

  4. Amen, casinokid.
    Right on the MONEY!