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HOAMCO is proud to bring you the following seminars

Coming soon:
April 11-12 Fair Housing with Lynn Krupnik - New Mexico
May - Risk management - Arizona
May - Are you ready for Street Repairs? - New Mexico
June - HOA Law Updates - Arizona
June - HOA Finances - New Mexico
July - HOA Finances - New Mexico
August - Fair House - Lynn Krupnik - Arizona
August - Understanding HOAMCO services to your membership

HOAMCO Flagstaff staff celebrating at Josephine's Bistro

_Our entire HOAMCO team would like to extend a warm welcome to our newest clients listed below and thank them for trusting us with their communities.  Thank you, too, to our current customers who so often serve as references, as there is no bigger compliment received than from  current customers who go out of their way to share their positive experiences with  HOAMCO.  

In New Mexico, associations are making the choice to work with HOAMCO as a company where every aspect of management, from accounting to compliance, is performed in New Mexican cities by New Mexican residents who care about and support the local economy.  Our new clients in New Mexico continue to confirm they want to do business with a homegrown firm that customizes its services to their needs, while providing the personal attention that may not be afforded by other large national management companies whose major functions are conducted miles and miles away.

All of HOAMCO’s clients enjoy the fact that HOAMCO only offers one thing — professional community association management.  While we assist our boards in selecting collection agencies, landscapers, leasing and realtor services, we leave those kinds of tasks to others in order that we may place 100% of our focus on what is in the best interest of each of our client associations.  Board members are pleased to see that HOAMCO’s fees are structured to be as fair to the individual homeowner as they are to the association.  We are a cutting edge company in so many ways, but when it comes to up-front honest fees, we prefer the traditional, straight-forward approach.  

We do one thing and we specialize in it.  We are the expert.  It is our job to go out and get the best price for our clients. 

Thank you for believing in us and thank you to the 136 HOAMCO clients who have now been with our company for over three years.

Homeowners Association Management Company is pleased to announce its transition to HomeWiseDocs.com, the next generation in electronic document and data delivery for community associations. With this new data delivery system, pertinent HOA documents and information required for real estate transactions will be available to order individually or in convenient bundles. All available documents are listed on the homewisedocs.com site. Additionally, if your lenders require specific questionnaire forms be completed, these too are available through homewisedocs.com.

Here are just a few of the many capabilities the homewisedoc.com site offers you to simplify getting the critical data and documents you need:

• 7/24/365 ordering
• Order documents by address or association name searches
• Share your order with up to four email addresses
• Multiple payment methods offered, to include payment at closing for resales
• Hard copy delivery options available
• Email and SMS text completion notices for users
• Resale and refinance documents available
• Track your orders online with order confirmation number

Log on to  HYPERLINK "http://www.homewisedocs.com/" \t "_blank" www.homewisedocs.com and select the link to register. Once you are registered, you will be able to order the data and or document products you need.  You may also access HomeWiseDocs.com at our HOAMCO site at  HYPERLINK "http://www.hoamco.com" www.hoamco.com.  For the BEST VALUE we recommend ordering the most comprehensive bundles available.  This will save you money and ensure all of your data and document needs are met in the most expeditious manner.

If you have any questions regarding this transition to HomeWiseDocs.com, please feel free to call HOAMCO at 928-776-4479 or at  HYPERLINK "mailto:hoamco@hoamco.com" hoamco@hoamco.com.

Click here to view a more detailed, printable doc file.

Contact
Judy Smeltzer
judy@hoamco.com
HOAMCO
P.O. Box 10000
Prescott, AZ  86304
928-776-4479

It’s that time of year when you are taking action on collection issues, deciding how to handle bad debt, and budgeting for next year’s bad debt. We understand that collection challenges have required boards to creatively, reasonably, and consistently determine how best to handle unpaid assessments. To help guide you through this process, HOAMCO has established recommended practices that we would like to share with you.

Click on "Read More" below for the rest of the article...

Handling current owners with outstanding assessments

The assessment collection policy is the foundation of an Association’s collection efforts. The course of action outlined in the policy must agree with your governing documents, state and national laws, and fit with your Association’s way of doing business. When an account reaches the final phase of the policy, the board is then confronted with deciding what best, next steps should be taken. Does it make sense to spend more on an alternative collection option then what is due? Have collection payment plans been attempted? Do threshold outstanding amounts need to be established that trigger next action, i.e., lien, collection agency, attorney? It’s important that the board partner with the management company in assessing options and take input from legal counsel, as necessary. After exhausting all reasonable steps outlined in the pol- icy, the next steps may include one or more of the following: (1) sending the account to a collection agency; (2) referring the account to legal counsel and pursuing an action for personal judgment against the delinquent owner; or (3) foreclosure action to foreclose the Association’s assessment lien. Some of these options may be costly, so good judgment comes into play. The manager has the capability to organize and sort by action, amount, or account, to help you better analyze your next steps.

Handling foreclosed accounts with outstanding assessments

When HOAMCO receives a notice that foreclosure action is taking place for a property, HOAMCO provides a copy of the notice to the manager and identifies the account in the data/ financial management system (TOPS) so that the account is identified in the Aged Owner Balances Report. Since likelihood of collecting the outstanding amount for an account in this status is low, accounting will automatically allocate the outstanding amount to Allowance for Bad Debt and expense as Bad Debt on Income/ Expense for communities who are on an Accrual Basis Method of accounting. Reason being, it is important for a community to understand its cash position since the amount of Income stated under Income/Expense is the amount billed, and not actually collected. The balance sheet will then reflect a more accurate cash position and amount to be collected under accounts receivable. If the property does not proceed through the foreclosure process and the owner becomes current, then adjustments are automatically made to Allowance for Bad Debt.

For communities on a Cash Basis Method, the amount of Income under Income/Expense reflects the actual amount collected and will therefore not need to be adjusted.

When the foreclosure process is completed and a deed is received identifying the new owner (bank or new owner), then the previous owner is identified with a (P) on the Aged Owner Balances Report and remains on the report and as part of accounts receivable until the board decides to write-off the amount.

If a write-off is the desired action, the amount in Allowance for Bad Debt on the balance sheet decreases and the amount is removed from the Aged Owner Balances Report for the Accrual Basis Method. If the association follows the Cash Basis Method, the account is removed from the Aged Owner Balances Report. If income is derived in the future, the income will be reflected as Income-Recovered Bad Debt.

Handling bankruptcy accounts

When a notice of bankruptcy is received by HOAMCO, the account is identified on the Aged Owner’s Report. The ledger is split so that amounts due from the date of filing forward continue to be added to the account and the Aged Owner Balances Report will show two amounts outstanding for the account – pre and post. HOAMCO stops sending collection letters until the discharge is received. The pre-bankruptcy amount (from the date of filing, back) is allocated to Allowance for Bad Debt if on an accrual basis. No action is required for cash basis. When a discharge is received, HOAMCO will notify the manager and pro- pose write-off of the pre-bankruptcy amount. The manager will then work with the board for write-off action. HOAMCO recommends write-off once discharged.

Considerations for Payment Plans

If the Association agrees to a payment plan with an owner, HOAMCO strongly recommends that this plan be in writing and clearly identified in TOPS. HOAMCO encourages that an auto-debit method for monthly installments be a part of the payment plans. Follow-up must occur, so managers will establish a tickler system to follow-up to ensure owners have honored the payment plan.

Collection Agency as an Alternative Action

HOAMCO is currently working with NCSPlus collection agency and board approval is required before any account is sent to the collection agency. Additionally, prior to submitting to the collection agency, HOAMCO sends a notice that the account is being sent and gives the owner one last attempt to become current. This final letter has been very effective in getting a response from owners with outstanding amounts.

It is important that the board understand that the likelihood of collection on an outstanding amount that was attached to a foreclosure is low and that the collection agency may not be successful in the short term. However, the action does demonstrate that all efforts have been exercised, and since the amount is reported to the credit bureaus, it may be collected in the future when the responsible party makes an at- tempt to cure all outstanding debts. A report of collection agency status with NCSPlus may be obtained at any time from the manager.

Legal Action as an Alternative Action

Some laws offices have developed effective collection packages that may be of interest to your communities. Please work with your manager to determine what services attorneys are currently providing, as the services / fees may change over time.

Budgeting for Bad Debt

For associations on an Accrual Basis Method (HOAMCO’s recommended method), the amount budgeted for projected uncollected assessments should appear on the Income/Expense statement under Expenses with its own line item titled, BadDebt. Most associations have been placing this budgeted amount under Administrative Expenses or Other Expense. When accounts are designated to be reflected in Allowance for Bad Debt, the amount designated will appear as an actual expense in the Income/Expense statement.

The amount budgeted for bad debt should be in line with the current delinquency rate of the association. The recommended formula for determining the delinquency rate is:

# of current owners (not previous owners)
over 60 days delinquent
___________________
# of total owners

HOAMCO does not recommend budgeting the projected uncollected assessment amount as a contra-income amount. Technically, bad debt is an expense and should be reflected under the Expense section of the Income/Expense report.

For associations on a cash basis, budget the income for what is expected to be collected. Allowance for Bad Debt does not appear on the Balance Sheet for cash basis associations, so it might make sense to add a note that explains how the budgeted income amount was derived.

If you have any questions, please do not hesitate to contact me directly at judy@hoamco.com. We appreciate and value our partnership with you.

Judy Smeltzer, Chief Operating Officer, HOAMCO