HOAleader.com - Tip of the Week - September 16, 2016
Published: Fri, 09/16/16
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Update on Reporting to Credit Agencies: The News Isn’t Good
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In this week’s tip, we circle back to update a story we reported on last month. Unfortunately, we have even more troubling news.
Equifax says it will soon begin reporting HOA owners’ payment history on credit reports, much to the dismay of the majority of the HOA experts we interviewed. Nearly all of them insist this will increase HOAs’ risks and liability but not improve collections.
Last month, Equifax didn’t have answers to all of HOAleader.com’s questions about how the program will be implemented; it referred questions to its partner in this effort, the data aggregation company Sperlonga. However, in August, Sperlonga noted it was scheduled to launch the credit reporting service by the end of that month and declined an interview at that time.
Despite that, we’ve since learned more about Sperlonga’s pitch to management companies that makes our experts even more uncomfortable. The upshot? Our experts are recommending their boards run fast and far away from this new service.
Here’s the new information that’s making our experts even more uncomfortable than ever: Sperlonga is pitching its “HOA Credit Reporting service” to community association managers as “a Zero Cost of Entry, Automated, Sustainable Cash Flow Addition to your Monthly P&L.”
In addition, the management company must grant rights (apparently to the data that management companies are providing, though that’s not spelled out in the marketing materials) to Sperlonga. It must also give Sperlonga access to the management company’s software so that Sperlonga can extract the data monthly.
“So it looks like the management company is getting money for the use of the association’s information,” says Jed L. Frankel, a partner at Eisinger, Brown, Lewis, Frankel & Chaiet PA in Hollywood, Fla., who advises community associations.“That’s more liability for the association without any benefit (unless the management company agrees to pay). It doesn’t look good for the association or its members.”
Lisa Magill, of counsel at Kaye, Bender & Rembaum in Pompano Beach, Fla., who advises Florida community associations, also has concerns. “It’s inappropriate for management companies to sell association data under any circumstances,” she says.
“I don’t even want to touch this with a 10-foot pole,” reports Brad van Rooyen, a partner at Home Encounter, a Tampa, Fla., company that manages community associations, who’s been pitched repeatedly by Sperlonga on its idea, most recently in mid-August. “They’re making it sound like this is this great option available for the associations, and I disagree. I really don’t feel the HOA is in the position to be or should be reporting to a credit agency. This isn’t a consumer loan.
Read more about what you can do to prevent your management company to add to your liability with very little benefit to your association in our new article: http://www.hoaleader.com/members/1432.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Update: New, Troubling Info on Equifax's Reporting of HOA Assessment Payments
Last month, we reported that Equifax says it will soon begin reporting HOA owners' payment history on credit reports, much to the dismay of the majority of the HOA experts we interviewed. Nearly all of them insist this will increase HOAs' risks and liability but not improve collections.
Last month, Equifax didn't have answers to all of HOAleader.com's questions about how the program will be implemented; it referred questions to its partner in this effort, the data aggregation company Sperlonga. However, in August, Sperlonga noted it was scheduled to launch the credit reporting service by the end of that month and declined an interview at that time.
Despite that, we've since learned more about Sperlonga's pitch to management companies that makes our experts even more uncomfortable. The upshot? Our experts are recommending their boards run fast and far away from this new service.
Click here to read full article:
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New Law Simplifies FHA Condo Certification
In this week's tip, we report on a new law signed by President Obama in late July easing restrictions on condos seeking to qualify for Federal Housing Administration-guaranteed financing. In case you're new to the issue of FHA certification, here's a quick rundown. The FHA guarantees home loans offered through conventional lenders, making the loans more appealing to buyers. The loans typically require less of a down payment and offer more liberal credit-score minimums for buyers than non-FHA mortgages.
Click here to read full article:
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What You Need to Know about the FHA's New Condo Regs
In late July, President Obama signed a law easing restrictions on condos seeking to qualify for Federal Housing Administration-guaranteed financing. Here's a rundown of what this means for your condo association.
Click here to read full article:
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Chicago Condo Sues Over Short-Term Rentals
In this week's tip, we tell Chicago that, with all your wonderful qualities, you're a little behind other cities when it comes to going after short-term rentals. A Chicago condo board has filed a lawsuit seeking to evict a tenant who has over and over violated the condo's short-term rental policies. The condo board has repeatedly fined the owner, but now it wants the tenant out. A Chicago lawyer says this is the first time he's seen a condo sue over short-term rentals, reporting that fining has typically fixed the problem.
Click here to read full article:
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A New Twist on Short-Term Rentals? Condo Sues Tenant, Owner
A Chicago condo board has filed a lawsuit seeking to evict a tenant who has over and over violated the condo's short-term rental policies. The condo board has repeatedly fined the owner, but now it wants the tenant out. A Chicago lawyer says this is the first time he's seen a condo sue over short-term rentals, reporting that fining has typically fixed the problem.
Click here to read full article:
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