I bumped what I had already written for the April newsletter because I think this topic is important at this time, however, what I am about to share is true regardless of the current crisis we are all experiencing. It is the truth and it is said with the utmost of compassion. Our values at Red Rock are always to collect with honesty, integrity and compassion.
I know y’all have been getting a lot of input as to what y’all should be doing with respect to collecting your assessments from a variety of entities. I would name them, but blood will just shoot out of my eyes, making it impossible to write this. All I want is for y’all to consider all of the facts. The aforementioned entities have a good heart, I do not doubt that, but there is a degree of ignorance because it is based on a false premise.
The false premise is that homeowners do not pay their assessments because they cannot afford it.
The fact is that only 13% of accounts that come to collections are because the homeowner cannot afford the assessments. 7% of the accounts come to collections because something went wrong with their auto-pay or they just weren’t paying attention. That leaves 80% for the real reason.
That reason is that the homeowner chose either subconsciously or consciously not to pay their assessments. This happens because they believe the order of making payment is as follows:
- Vehicle payment
- Utility payments
- Other loan payment
- Credit card payments
- Cell phone payment
- HOA assessment payment
They fail to realize that the order is incorrect. It is not until they get to collections that they realize that their assessment delinquency is leveraged by a lien on their property and that in the state of Nevada the HOA is on equal footing with the lender, so they could ultimately lose their home. The fact is that their HOA assessment should be Number 2 on the above list.
We all want to help the homeowners. For example, Red Rock routinely writes off a portion of their collection fees to help homeowners even when there isn’t a crisis, including $90,000 in 2018 and $70,000 in 2019. During this time of crisis, we want to help them even more with payment plan deferments, extended payment plans as well as collection fee write-offs. However, we cannot do all of this if y’all don’t send us the accounts.
Obviously if y’all vacate the assessments, that would be a real help. If y’all are not in a position to do that, the next best thing you can do is get them on a payment plan yourselves to avoid collections. This has been suggested by the unnamed entities. The problem is that y’all already do that. You always have. Your management company sends the pre-collect letter virtually begging the homeowner to get on a payment plan to avoid collection fees. The reason so many homeowners ignore this plea is because they fall into the 80%. The reason the state of Nevada created the pre-collect process and put it with the management companies instead of the collection agencies was to help the homeowner avoid collections. Nothing has changed in that regard.
I want homeowners to avoid collections, but if they come to us, I want to help them. I want to educate them, so they don’t come back to collections. I want to give them a break whenever possible. I especially want to help them in this time of crisis. Letting the homeowner’s assessments just pile up into a larger balance and then sending them to collections anyway in 90 days is throwing them an anchor, not a life preserver. Besides, in most cases we are talking about a very small balance. Postponing $300 in assessments isn’t doing much at all unless it is part of a payment plan.
During and after this crisis, there are going to be more homeowners that fall into the 13% instead of the 80% and they are going to need not just your help, but our help as well. We intend on being there for them. The fact is everyone is going to want to get paid when this is over and some homeowners are going to have some tough decisions to make. I am convinced that it is better that we help them now, not later. By all means, as always try to get them on a payment plan, but if that fails, send them to collections, so we can help them. (I realize that not all collection agencies conduct themselves like us, so you should take that into consideration as well.)
Stay safe and if you ever need anything or have a question, I am available 23 hours a day, 7 days a week.