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Should Condo Fee Payments Be Reported To Credit Repositories?

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condo-association-fee-credit-reportingA new battle is about to be waged in condo fees credit reporting. Equifax announced it will be collecting information on condo fee payments using a data aggregator, Sperlonga. They believe this will be good because those who pay timely will get the benefit of their good payment habits.  Some say, “Hold on, just a minute there cowboy!” (Condo Fees)

Some believe this may not be so good for those who would be required to report this info. Too much liable if they don’t do so accurately and timely. Understood, but that goes for any entity reporting consumer debt obligation payment data?

Although attorneys who represent the entities in the collection of delinquent HOA fees may be exempt under the rules of the Fair Debt Collection Practices Act from such reporting, should the entity that is responsible for the fee collection, and who engages their services to do so, also be exempt?

The reporting of this information will benefit consumers who pay on time and creditors who may be considering new debt to these consumers. Both will have the benefit of more accurate and complete debt obligation treatment by the consumer. Consumers who pay regularly on time will carry a better credit score than those who do not. This is good for future creditors to know.

Yes, there is a risk to the Condo Association, and Management Companies who serve them, for some liability from inaccurate reporting, but why shouldn’t there be? If they accept the responsibility to collect the funds, then they should be responsible and accountable to properly report their activities. If they don’t, and a condo owner’s credit is harmed, or worse an action is brought against them by mistake, they should be held accountable.

From a mortgage lenders standpoint, this information is critical as in many states. Unpaid HOA fees take precedence to the first mortgage lien. I think lenders would want to know if current mortgagors were delinquent on their HOA fees, and further, if a new applicant had a poor history of making past condo fee payments on time, and if that led to an action by the association.

The potential harm to a unit owner of a poor HOA fee payment history would help many struggling associations collect money due them, and needed, on time. This is good for the association, the upkeep and maintenance of the project, and those unit owners who pay regularly on time. Why should those who don’t pay, get a pass?

As I’ve written before, it all depends on what angle you view the play; sometimes it’s a catch and other times it’s not. In this case, it depends on who needs to report and the risks if not done properly. Simple solution; do it right. Then those who report have nothing to worry about and those who don’t pay will be exposed.

After all isn’t that the purpose of this whole credit reporting thing?

Michael Vitali

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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Michael Vitali

About Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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