Trillions Going, Going, Gone

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Most financial experts believe US households had between $2-3 Trillion in excess savings at the end of 2021. That is TRILLIONS with a T! Those same experts believe that the amount has been reduced by 50% as of the end of 2022, and that those savings would be depleted by the middle of 2023. That is a lot of money to burn through in 18 months.

The good news for HOAs is that households have been able to stay on top of their assessments. Delinquencies have not been much of a problem in recent years, but that is changing. Savings are being depleted and we are likely in a recession or entering one soon.

What are you doing to prepare your communities for increased delinquencies? If your answer is “nothing” or referring them to their attorney, I encourage you to consult someone in our industry that worked through the Great Recession. We had a severe problem with delinquencies 10 short years ago, and the cost of legal services for collections is hard to justify when times are tight.

Hopefully, we will never experience that kind of fallout again, but the cyclical nature of our economy says we will have more delinquencies soon. When that happens, paying legal fees for collections on top of lost revenue is not a sound fiduciary strategy. Even communities that can “afford it” should not take on that extra burden.

Do not wait for the problem to appear before you look for a solution. Plan now and you will be ahead the problem with our unique solution (deferred fees), recovering 100% of your delinquencies at no out-of-pocket costs for liens, foreclosures, and filing fees.

Review this short video to understand our process. As a fiduciary, the benefits could not be clearer for communities, CAMs, and attorneys.

We Don’t Have a Delinquency Problem… Yet

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I recently attended a symposium for HOA Board Members and served on a panel with other experts addressing HOA Financial Planning.  The 200+ Board Members in attendance should be commended for taking time out of their schedule to help their communities prepare for their financial future. 

My co-panelists represented HOA insurance and reserve studies.  Clearly, you don’t look for insurance in the middle of a claim or a reserve study when starting a major project – you plan ahead so you have the right coverage and resources in place before they are needed. 

The same is true for collections.  Choosing the right solution now ensures you don’t have excessive legal fees or financial shortfalls in the midst of a recession.  Yet, I am surprised at how often I am told “delinquencies are not a problem” by Community Managers and Board Members.

To be fair, it has been over 10 years since we had a serious problem with delinquencies.  I expect that many Community Managers and Board Members were not in their current role to experience the challenges of the Great Recession.  Hopefully, we never experience that kind of fallout again, but the cyclical nature of our economy says we will have a recession soon (if we are not already in one). 

Most financial experts believe the extra savings accumulated by households from COVID stimulus will be gone by the middle of this year.  Combine that with further rate increases by the Fed to rein in inflation and we have the recipe for increased delinquencies. 

Don’t wait for the problem to appear before you look for a solution.  Plan now and you will be ahead of the problem with our unique solution (deferred fees), recovering 100% of your delinquencies at no up-front costs for liens, foreclosures, and filing fees.

 Take a look at this short video to understand our process.  As a fiduciary, the benefits could not be clearer for communities, community managers, and attorneys.  

Reducing the Impact of Inflation

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I wanted to call this blog our “Inflation Reduction Act”, but then I thought better of it.  We can see that inflation reduction will not be here in time for 2023, but we can help. Consider the following:

inflation reduction

If you are looking for a way to offset increases, consider a deferred collection solution like Equity Experts that does both proactive outreach and legal actions with attorneys. This approach will reduce your budget and increase cash based on the following:

  • Fees are deferred for the community, so owners that pay timely are not forced to finance the collection activity of neighbors who do not pay their assessments.
  • Fees are fixed and not subject to additional hourly charges that can bloat the cost of collections.
  • Delinquencies are resolved much faster than the industry average.


Much of our success at Equity Experts is based on our unique approach to collections.  We use data analytics to determine the best method to collect a debt and the best way to communicate with each debtor.  We proactively reach out to debtors to educate them on the importance of timely payment to avoid additional costs and actions.  Once we open the lines of empathetic and respectful communication, we offer numerous payment methods to help quickly resolve the delinquency.


Unlike most law firms, our attorneys receive insights from our analytics that help them choose the most efficient legal action.  Our scale helps keep legal costs down, and our platform remains available for prompt communication and convenient payment methods.


We offer a debtor hardship program called RelEEf to provide debtor assistance.  Once again, our analytics help us identify and qualify cases where assistance is needed.  We may waive up to 100% of our fees and provide extended payment terms to help the delinquent owner repay their assessments.  

different. better.

This is not your typical “contingency” collection agency or a “churn and burn” law firm.  We recover 100% of the assessments owed to our clients and collect our fees from the debtor.  We do it all, including legal actions, and we pay our own way because we are confident in our approach. 

Use the following calendar link if you or your Board would like to learn more.

Bursting Your Bubble?

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Bursting your bubble?

What if I told you that inflation was at 5.6%, gas was averaging $4.11 per gallon, and house prices had risen dramatically?  No big deal, right?  We are working our way through it… but those statistics are from 2008, immediately before the housing collapse.  Our present stats are worse.  Here is a quick comparison:

Bursting Your Bubble Table

There are plenty of reasons to believe that we will not see a repeat of the Great Recession, but the Fed is signaling that there will be a correction in housing.  The link and summary below are directly from the Federal Reserve Bank.

Managers should expect a decline in resale activity in the coming months, which will level-off and remain modest for 2-3 years.  Resale transactions have been a shot in the arm as we exit Covid, but it couldn’t last forever.  So how can you plan now to limit those losses with offsetting revenue sources?

Our team can provide a free revenue analysis if you are interested in ways to increase revenue during an economic downturn.  We can suggest options ranging from first-party workflow automations to integrated partnerships

What is the fed saying?

Our evidence points to abnormal U.S. housing market behavior for the first time since the boom of the early 2000s. Reasons for concern are clear in certain economic indicators — the price-to-rent ratio, in particular, and the price-to-income ratio — which show signs that 2021 house prices appear increasingly out of step with fundamentals. While historically low interest rates are a factor, they do not fully explain housing market developments. Other drivers have played a role, including pandemic-related U.S. fiscal stimulus programs and COVID-19-related supply-chain disruptions and associated policy responses. The resulting fundamental-driven higher house prices may have fueled a fear-of-missing-out wave of exuberance involving new investors and more aggressive speculation among existing investors.

Foreclosures Increase as Moratoriums Expire

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As we indicated in our August 9th, 2021 article, owners could still request COVID mortgage relief through September 30th, potentially extending forbearance until March 31st, 2022. In a recent article from DS News, the trend in active forbearance plans continues to decline, as show in this graph:

Active Forbearance Plans

Attom Data shows a corresponding impact in foreclosures. In their January 2022 U.S. Foreclosure Market Report, default notices, scheduled auctions or bank repossessions were up 29% from a month ago and 139% from a year ago.

Repossessions by banks also increased, up 57% from last month and 235% from last year. These were the hardest hit states:


A recent article on Yahoo! Finance says it all: A Wave of Bankruptcies and Foreclosures Appears to be Building. Maybe. Maybe not. But, good managers will be prepared. Here are some steps to consider:

  1. Ensure your collection policy is being followed. Many communities slow-rolled collections during the pandemic, but now is the time to be vigilant and consistent.
  2. File liens to protect your interests if you are not in a state with statutory lien laws for condos & HOAs.
  3. Use a hardship verification service like the free tool at when hardship claims or payment terms are requested by a homeowner.
  4. Make sure your collector does a thorough risk analysis of all delinquencies to screen for bankruptcies, military activity, bank foreclosure, and lien priority.
  5. Require your collector to use current technology and predictive analytics to maximize ROI and reduce costly legal actions.
  6. Keep in mind that your collector or attorney are vendors and fiduciaries. You should circulate an RFP annually to ensure your community is getting the best value and performance when addressing delinquencies.

As we indicated back in August, we don’t yet know the extent to which delinquencies will increase, but they will increase. The astute Board and Manager will be prepared.

Vaccinate Your 2022 Budget

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VACCINATE your 2022 budget

Good News:  We are exiting the pandemic!  Many have found new freedom in their work routine, increased wages, higher home values, and healthy stock portfolios.

Bad News:  Some have really struggled, and the programs that helped them stay afloat are expiring.  Forbes referenced a Harvard research project that explains how hard some have been hit.  

5 Ways to save:

  1. Lock in Prices Now: If you have good vendors in place, negotiate extension of their agreements now.  Going out for bid on contracts will be a harsh wakeup call.  Vendors worth their salt have plenty of work, and most are being forced to pay higher wages.  If you can lock in current pricing or even a modest increase, do it now.
  2. Review Long Term Agreements: If you already have multi-year agreements in place, review them to make sure you have strong termination provisions.  You cannot afford to get a last-minute termination notice in this environment.
  3. Prioritize Capital Projects: Material prices are skyrocketing.  You may need to revisit your reserve budget and push back some projects until prices come back to earth.
  4. Support from Utilities: Input from your utility providers may help you reduce expenses through a variety of programs.  Government regulations and incentives have your utility providers looking for ways to help you reduce consumption – take advantage of it!
  5. Insurance Deductibles: Check the amount of your insurance deductible and determine if it can be increased.  The goal should be to minimize the cost of insurance, have adequate emergency reserves, and only use insurance for significant loss events.

When it comes to revenue, the calculation is simple: community associations need 100% of it.  In the most recent issue of Common Ground, CAI identified some chilling statistics that could impact delinquencies.  Mortgage delinquencies have doubled since the start of the pandemic.  And a survey of CAI members found that 5% of owners were 90 days or more behind on assessments.  Giving adequate attention to projected revenue for your community is essential in this environment.  Here are some ways to “vaccinate your budget” against decreased revenue.

5 ways to retain revenue:

  1. Look for trends.  How has your AR and collection expense changed compared to 2020? What happens if you extend that pattern through 2021?  Now double it based on the elimination of federal moratoriums and subsidies. 
  2. Revisit your budgets from 2009-2011.  No one thought we would repeat the Great Recession, but pandemics don’t respect economic cycles.
  3. Make sure your financial statements show visibility and ROI into all collection costs:
    1. What is the total time and total cost of recovery for each delinquency?
    2. Create a line in your budget item for unrecovered legal/collection fees
    3. Create a Bad Debt line item in your budget for unpaid assessments
  4. Ask your collector or attorney to defer their fees.  Communities struggling with unpaid assessments can’t afford to pay fees now in the hope that they are recovered in the future. 
  5. Share the pain.  If collection and legal costs are deemed unreasonable, or if they are reduced in order to get a settlement, ask your collector to absorb those costs.

According to TechCollect, a data and predictive analytics provider, the average cost assessed to a homeowner for a lawsuit or a foreclosure is around $2,500. Alternatively, their data shows that the average cost of collections without legal action is around $500.  Up to 60% of owners will resolve their account without legal action if given an appropriate opportunity.  Predictive analytics and data mining improve results by providing multiple communication methods for outreach along with a path to the shortest and least-punitive resolution.

Collection Costs

Law firms that perform collections rarely have the resources or incentive to provide effective proactive efforts.  And the collection policies proposed by many attorneys suggest prompt legal action after a single warning letter.  This is troubling for Boards that want to avoid costly legal action against their members.

Bottom line: There is great uncertainty regarding increased expenses and revenue loss for communities.  Some resourceful and proactive effort can limit increased expenses, and data science can tell us how best to preserve revenue while making legal action increasingly rare.  More settlement options and better recovery methods are a positive evolution for our industry.  And the fiduciary obligation of Boards and managers is well-served by finding human-first solutions that reduce the need for legal action.

Besides, a compassionate, proactive approach, like the one detailed below, is just good business. 

  • Risk assessment prior to collection action
    • Evaluate risk of bankruptcy, military activity, bank foreclosure, etc.
  • Proactive outreach prior to legal action
    • Phone, email, SMS and Social Media
  • Debtor location methods for effective communication
    • Address, emails, phone numbers, and digital footprint
  • Payment plan options

Gar Liebler is active in real estate investment and technology services for the property management industry.  His original property management firm, LandArc, was founded in 1985 and sold in 2015. 

Equity Experts is a tech-based collection and foreclosure service for assessment recovery in community associations.

Expiration of Moratoriums

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Expiration of Moratoriums (and what it means for community associations)

The Federal moratorium on evictions and foreclosures expired July 31, 2021.  While this rule was specifically for federally backed mortgages, many other mortgage providers and agencies, including condo/HOA collectors, were honoring this guidance. 

Now that the moratorium has expired, what should we expect?  There is a fair amount of confusion over the program and the significance of July 31.  An article from CNET helps clarify the program and the relevant dates.  Here is what we need to understand for community associations:

  • There will be an increase in condo/HOA foreclosures in the coming months.
  • The majority of the remaining forbearance plans will expire between September 30 – December 31, 2021.
  • Owners can still request mortgage forbearance until September 30 that could extend through March 31, 2022.

Based on this information, we can surmise that there will be some immediate uptick in activity simply because many non-FHA collectors were honoring the July 31 date.  And the trend will continue through March 2022 as the remaining forbearance plans expire.  The chart below from the FHA lays out the forbearance periods. 

Covid Forbearance Periods

The Washington Post provides a dire perspective, characterizing the deferred debt as a tsunami that is about to hit homeowners.  Regardless of whether the impact comes as a tidal wave or a flood, the impact will be felt by communities.  Here are the numbers that you and your community need to know:

  • Over 2 million homeowners are delinquent on their mortgages
  • 8 million are in forbearance
  • 5 million are 3+ months behind
  • 10% of those in forbearance do not have adequate equity
  • 5% of delinquent homeowners are unemployed
  • 8% of those in forbearance are using the money to pay other bills

Attom Data sees a concentration of foreclosures in 50 vulnerable counties: “The report reveals that a stretch of states running from Connecticut through Florida, plus Illinois, had 43 of the 50 counties most vulnerable to the economic impact of the pandemic.”  Most owners that had the means to get out of forbearance are already back on track, but those still in forbearance are unlikely to get caught up on their mortgage, property taxes, and insurance.  And once that reality sets in, we will see an increase in HOA/condo delinquencies.  Homeowners facing the reality that they can’t afford to keep their home will keep whatever cash they can and let the debt holders, including their HOA, jockey for position once the home is sold or foreclosed. 

Here are some important steps to take for your community:

  1. Ensure your collection policy is being followed. Many communities slow-rolled collections during the pandemic, but now is the time to be vigilant and consistent.
  2. File liens to protect your interests if you are not in a state with statutory lien laws for condos & HOAs.
  3. Use a hardship verification service like the free tool at when hardship claims or payment terms are requested by a homeowner.
  4. Make sure your collector does a thorough risk analysis of all delinquencies to screen for bankruptcies, military activity, bank foreclosure, and lien priority.
  5. Require your collector to use current technology and predictive analytics to maximize ROI and reduce costly legal actions.

Now would also be a good time to circulate an RFP to your current attorney/collector while requesting proposals from other collectors in your area.  This will bring transparency and accountability to collections, just like you require for all other vendors.  The following best practices are suggested to limit risk and cost exposure while increasing transparency into the collection process:

  1. Use separate agreements for legal representation versus collections with no requirement to use the same firm for both services.
  2. Require that legal fees related to collections are deferred and collected from the debtor (not paid by your HOA) so that your community does not have to “finance” this cost.
  3. If your attorney will not defer their collection fees, create a separate budget line for legal fees and costs related to collections to ensure 100% is being recovered.
  4. Ask your manager to track and report the time to reach a resolution on each delinquency and maintain a running average on the number if days to resolve delinquencies.
  5. Use proactive efforts to contact owners and negotiate payment prior to legal action and track the percentage of accounts that are successfully resolved without legal action.

For the moment, we may have dodged a bullet when it comes to the economic impact of COVID-related delinquencies in community association.  We should be grateful but ever-vigilant in this season of first-ever experiences.  We don’t yet know the extent to which delinquencies will increase, but they will increase. The astute Board and Manager will be sure to be prepared.

COVID Relief and Artificial Ignorance

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I have marveled at the way our economy has remained relatively healthy throughout COVID. Many of us expected a much more significant downturn, but some industries have actually prospered. Much of this can be attributed to the significant stimulus from the government, but that comes with strings attached. In this article we will take a look at what that stimulus means in the long run for community associations and how we can get ahead of the impact that will occur.

Do we have a false sense of security because of the trillions of dollars pumped into our economy? And if so, is that real economic health, or is it artificial? I contend that much of what we are experiencing is not sustainable, and we have a false sense of security, yet many want to believe that we will continue to experience economic growth. I call this artificial ignorance.

Artificial ignorance is not an antonym for artificial intelligence. It is merely a descriptor for the artificial sense of security we have during this once-in-a-lifetime pandemic. Some believe that our thriving economy will continue, but that is not plausible. What we have been doing is not sustainable. So, what comes next?

Who knows what will happen as we exit COVID, but I do know HOAs and condos are in a unique position. Unlike mortgage companies with federally backed loans, nonprofit community associations need timely payments to sustain their operations. These operations include municipal-like services and amenities, such as: trash collection, road and building maintenance, landscaping, snow removal, pools, fitness rooms, and playgrounds. The broad brush of forbearance and moratoriums cannot be applied to community associations, which operate as non-profits. Yet lawmakers continue to make overtures about relief for debtors that would leave community associations trying to survive without those payments. This could prove to be extremely harmful to our industry.

There are certainly situations where unique hardships related to COVID merit our consideration and support. Communities have been offering extended payment plans and withholding punitive collection actions in those cases. But, this can only be sustained to the extent that the rest of the homeowners within the Community can share the burden of those hardships. That is rarely possible, and the bank account is going to get dangerously low, so we won’t have an option but to require payment in order to fund the operation of the nonprofit community association.

Community associations may be feeling good now, as a recent article published by the CAI found that delinquency rates for January and February were only 5%, a 2% decline from the end of 2020, but this cannot be expected to last long. As Dawn M. Bauman, CAE, executive director for the Foundation for Community Association Research and CAI’s senior vice president for government and public affairs stated, “While assessment payments are holding steady, we expect to see an uptick in delinquency rates once mortgage companies are authorized to handle delinquent mortgage payments.” Community associations need to be prepared for this increase, and this puts boards and community managers in a difficult spot. This can feel like a no-win proposition. But, it’s more important now than ever to collect on delinquent assessments before it gets too late and the financial problem spins out of control.

We need recognition of the unique challenges facing community associations. The broad brush that is being used by lawmakers and policy wonks is an existential threat to community associations if they are not acting with our unique situation in mind. Exemptions need to be extended to community associations, managers, and collectors for the work they are doing to help these nonprofits sustain their activities. Without some form of protection from government moratoriums and opportunistic attorneys, we all stand to lose.

Headed Toward a Cliff: Losing Your FHA Eligibility

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I am surprised that I have not heard more about the risk of communities losing FHA eligibility amidst COVID-related delinquencies.  According to a recent article from CAI, the FHA will not secure mortgages in communities with greater than 10% delinquency.  A delinquency rate of 10% was unthinkable one year ago, but many communities are now at that point, but (and this is a big BUT) they may not realize it.  The reason is that mortgage forbearance programs and government stimulus have helped owners remain current on their assessments.  These programs won’t last forever, and we will know the real unobscured delinquency rate when they expire. 

According to CAI “one in 10 homeowners are unable to make mortgage and related payments as a direct result of the COVID-19 national emergency.”  Let me help you with that math; it’s 10%.  See how easily your community could fall out of compliance with FHA requirements?

If you are unfamiliar with FHA requirements and benefits, take a look at these recent articles from the Community Association Institute and The Washington Post.  Access to FHA-backed loans is an important element of competitive financing and property values.  Simply stated, if you lose your FHA eligibility, your property values go down.

Sadly, many boards and managers are acting as if delinquency rates will not change.  To make matters worse, a large number of communities have placed an indefinite “hold” on collections during COVID-19.  These communities are creeping close to the edge of the FHA cliff. 

Prudent communities are making preparations now, before it is too late.  Proactive measures that can help communities address delinquencies come down to three elements:

This strategy ensures you are taking appropriate fiduciary action during an extraordinarily unusual time.  The alternative, which appears to be the “do nothing” strategy (which is still doing something) puts your fate in the hands of the economy.  Or the government.  Or the gods.  Who knows, but it certainly defies fiduciary scrutiny.  I couldn’t put it any better than The Washington Times:

“A condo board has a fiduciary responsibility to its owners to maintain the financial health of the association,” Knull says. “If a board permits the percentage of delinquencies to grow and remain uncollected, it is failing to properly discharge its duty to the condo association’s owners. Encountering condo projects with excessive delinquencies is a turnoff to buyers, who see no upside to voluntarily incurring financial risk by purchasing in a community that doesn’t seem well managed or financially responsible.”

Effective collections are an important element of financial health. As you review the effectiveness of your collections, consider getting standardized bids on an annual basis. If you would like a free collection RFP template, email us at [email protected] 

RFP for Collections

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It’s completely free – and we only need your email address to send it over!

When I owned a property management company, we went to great lengths to standardize our bidding processes.  We created online bidding, vendor screening, and requests for proposal (RFP) webforms that could only be submitted if they were complete; no opportunity to cross out items or modify the RFP.  The result was consistent bids that we could present to Boards in a simple matrix.

The single exception to our efforts was attorneys.  When we requested proposals for collection services, our forms would get discarded and instead we would get a brag letter, rate sheet, and retainer agreement.  What we learned was that local attorneys often relied on their relationship with the Board to circumvent the manager, so any effort to create standardization and accountability in that relationship was met with stiff resistance.  But this is changing.

Relationships are important, but standardization required by the Fair Debt Collection Practices Act (FDCPA) all but ensures that collections be treated as a commodity.  The letters and processes used between different collectors will have very little distinction, so awarding collection services to one vendor over another should be based on results and ROI. 

Board members are becoming savvier about their options, and their expectation for tech-driven efficiency is increasing.  Workflow software and document assembly systems are helping to drive down the cost of collections while increasing accuracy, and predictive analytics can instantly provide the best collection strategy for each delinquency.  The result is better ROI with less liability, faster recoveries, and less punitive cost to the debtor.

Collections are an important aspect of the fiduciary relationship.  As Boards consider the cost and ROI of their collections, it only makes sense that they seek standardized bids on an annual basis. 

If you would like a free Collection RFP template, fill out your email address and we will contact you immediately.  We wish you the best in the new year and hope that this helps!