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HOA Credit Reporting Presentation

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Homeowners and Condominium Association Credit Reporting Service

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HOA Credit Reporting Presentation

  1. 1. PRESENTED BY: COMMUNITY ASSOCIATION MANAGEMENT REDUCE DELINQUENCIES AND LEGAL FEES WITH CREDIT REPORTING SERVICES Reward Timely Payments and Reduce Delinquencies by Reporting HOA and Condominium Assessment Payments to Credit Bureaus
  2. 2. The Collections Problem Copyright 2017 Community Association Management, Limited - All Rights Reserved
  3. 3. The Problem for the Homeowner Prospective buyers look at the financial health of the Association Government Entities and Mortgage Companies also look at the Association’s financial health, this determines loan worthiness An Associations financial health may disqualify potential buyers from receiving a loan Deferred maintenance, due to lack of timely funds, reduces property values Copyright 2017 Community Association Management, Limited - All Rights Reserved
  4. 4. The Problem for the Association Assessments get put at the bottom of the stack to pay each month Homeowners know they can pay their assessment last This escalates in market downturns like the housing crisis of 2008 Directly affects how the association budgets each year Overspending on collections fees/legal expenses Copyright 2017 Community Association Management, Limited - All Rights Reserved
  5. 5. Associations rely on predictable and steady cash flow! Homeowners paying on time is the most critical component for the health of an Association Delinquent assessments drain time and resources away from other Board initiatives, which can result in deferred property maintenance or putting off projects due to lack of funds Steady cash flow allows everyone to get paid, and how Associations Build Reserves or Get Loans for improvements Remedies such as liens and collections take time, are costly and don’t have an immediate impact on the property owner, thereby hurting overall community morale Associations need a powerful financial management tool to systematically prevent and quickly remedy delinquent accounts Copyright 2017 Community Association Management, Limited - All Rights Reserved
  6. 6. Consumers Monitor Their Credit Millions of consumers monitor their credit by utilizing credit monitoring services from their credit card company or third party provider Credit reports have become one of the leading risk and payment performance indicators for lenders, creditors, and debt owners Community Associations Institute (CAI) estimates that associations collect approximately $70 Billion per year in assessment payments Copyright 2017 Community Association Management, Limited - All Rights Reserved
  7. 7. Associations can use reporting of assessments to the credit bureaus as a reward and incentive Copyright 2017 Community Association Management, Limited - All Rights Reserved
  8. 8. Reward Timely Payments Some assessments are larger than auto and credit card payments Currently, assessment payment status is not included in Credit Reports or Credit Scores Monthly reporting of timely payments can increase credit scores and provide property owners with additional benefits outside of their association Timely payment remarks on credit will last up to 7 years Copyright 2017 Community Association Management, Limited - All Rights Reserved
  9. 9. How the reporting process works Copyright 2017 Community Association Management, Limited - All Rights Reserved Assessments are reported as Delinquent when they are 30 days late.
  10. 10. Association Benefits Empowered with a banking and credit industry- standard financial tool that impacts property owner’s credit reports Reward property owners that pay on time with benefits outside of the association such as positive impact to credit report Association spends less in legal fees for collections and improves cash flow Utilize a fully transparent and equal treatment based policy to manage assessment payments Can help increase property owner use of Automatic payment options (saving on billing statement costs) Copyright 2017 Community Association Management, Limited - All Rights Reserved
  11. 11. Property Owners Benefits Timely Association payments could help raise credit scores Low Association delinquency rates make properties easier to refinance and sell Reduce regular or special assessments or eliminate increases due to lower delinquency rates Association spends less time on collections and more time on other critical Association matters Lower delinquency rates provides more resources for the maintenance of common areas – Improved Community Morale! Copyright 2017 Community Association Management, Limited - All Rights Reserved
  12. 12. What are the legal considerations when reporting to a Credit Bureau? Association assessments will be classified as revolving debt payments Associations have the authority to refer delinquent accounts to collection agencies and to report positive and negative payment histories The Federal and State Fair Credit Reporting Acts permit Associations to report payment histories The Fair Credit Reporting Act (FCRA) provides payment data furnishers with immunity from individual consumer lawsuits for violations of the FCRA. Only regulatory agencies can pursue violations. Associations have the authority to report but need a solution that complies with financial and data management regulations Copyright 2017 Community Association Management, Limited - All Rights Reserved
  13. 13. How Much does it Cost? Monthly Credit Reporting is Free for non-delinquent Homeowner Accounts Delinquent Accounts are charged at $15.00 per month Delinquent costs can sometimes be charged back to the homeowner* resulting in zero cost to the association Late fees can offset the cost, resulting in zero cost to the association *depends on your Associations governing documents and whether they specifically allow it Copyright 2017 Community Association Management, Limited - All Rights Reserved
  14. 14. Common Questions Q: Do you need SSN’s, DOB, Medical Records, Bank Accounts? A: We do not want them, or need them to report. The system matches the owners based on specific criteria that doesn’t require a social security number or date of birth. Q: When are delinquencies reported? A: Assessments are reported as delinquent when they are 30 days late, and each 30 day period they remain unpaid. Q: Can you only report on the delinquent Homeowners? A: No, because of fair and equal treatment of all Homeowners, everyone must be reported every month. Q: Can you report on homes that are rented out in an Association? A: Yes, unless they are owned by an LLC or Trust Q: Who are you reporting to? A: We are currently reporting to Equifax Copyright 2017 Community Association Management, Limited - All Rights Reserved
  15. 15. Common Questions Q: What if something is reported incorrectly? A: We provide updates to Equifax daily with corrections. All disputes are handled by the Credit Reporting Agency. Q: Is there a minimum number of homes per Association? A: No, we report on 5 or 5,000 homes Q: When do we notify the homeowners? A: Good business practice suggests a 30 day notification to all Homeowners in writing once the Association has signed up. Q: What if we don’t have delinquencies? A: This is also a proactive solution in case of a market downturn, and a way to positively reward homeowners who pay on time with positive remarks to their credit report. Q: Should we stop filing lien/foreclosure actions? A: No. When Credit reporting is used, the number of delinquent homeowners will decrease. When used in conjunction with lien and foreclosure you will be able to collect from those that may be unconcerned with their credit score. Copyright 2017 Community Association Management, Limited - All Rights Reserved
  16. 16. Summary Proven effective by multi-billion dollar industries Incentivizes Homeowners to pay on time Builds Credit Profile for Homeowners who pay on time An Immediate action every month, for monthly cash flow Inexpensive solution Can reduce legal and collection fees Copyright 2017 Community Association Management, Limited - All Rights Reserved
  17. 17. Ready to Get Started? Contact Martin Stinson 704-307-4535 or Sign up at: http://communityassociationmanagement.com/credit-reporting-services/ Copyright 2017 Community Association Management, Limited - All Rights Reserved

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