by Elaine Roberts Musser –
I wrote an article for the Davis Vanguard last month, decrying the shady practices of debt collectors in the homeowner association arena. You can access this article in the Davis Vanguard archives. It is entitled ” Word to the Wise: The creation of Artificial Debt”. In it I referred readers to a link to see news coverage on the subject by KTVU in Oakland at the following website: http://www.ktvu.com/news/20138028/detail.html. Now there is an important update to the story.
During the proceedings on August 4, Santaella testified that sometime in 2007 she had sent a money order certified mail to Peachtree Management, property manager of Bridges Homeowner Association (BHA) in San Ramon. The money order was specifically sent to pay in advance all 2007-2008 assessments that would be due to BHA.
Much to Santaella’s horror, in November of 2008, she received an unsolicited telephone call from a foreclosure “prospector”. He wanted to know if she was interested in selling her house, since it was in foreclosure. Not until that phone call did Santaella have any idea liens had been recorded against her home for alleged nonpayment of assessments.
Santaella’s money order had apparently never been cashed. Peachtree Management claimed it was never sent. Kari Bristow, manager of the debt collection agency, and Veronica Sandoval of Peachtree Management testified Santaella was sent multiple notices by certified and regular mail, of the assessment liens and Notice of Default. However, Judge Paul Maier did not believe their testimony.
The attorney for Angius and Terry, John Vallejo, acknowledged the Notice of Default was not personally served on Santaella, as required by law. The only defense he could offer was, “We were going to wait until the house was put on the auction block before serving it so we could save her money”. Ironically, it was the Notice of Default, a publicly recorded document, that triggered the call to Santaella from the foreclosure prospector.
I don’t know all the particulars of the Santaella case, but it is not uncommon for a management company to refuse to accept certified mail. It gives plausible deniability of ever having received any payments. And the homeowner is not necessarily notified of such a policy. How convenient. This is one of the many ways management, in concert with debt collection agencies, collude with each other to create artificial debt they both collect whopping fees on.
In another case I was involved with, the original “debt” was for $395, artificially created by refusal to accept my client’s checks sent certified mail. Neither the homeowners nor the homeowners association board knew of this newly instituted policy to not accept certified mail. Within a matter of a few months, my client’s account was sent on to collections, and a Notice of Default filed. The collection fees tacked on were more than $7,000!
The collection agency would not accept any partial payment. My client either paid not only the $395, but all collection costs at once, no matter how unjust. Her home held hostage, my client decided to fight back, by going to mediation, at an additional cost of more than $12,000. Unfortunately she was not in a good bargaining position, and the other side knew it, as they always do. The terms of the settlement cannot be disclosed. My client ran out of money to battle any further in court.
It is hard to believe that something like this can happen in America, but it is happening with frightening regularity, as the cases above show. There is a very good reason why a Notice of Default must be served in person: to ensure the homeowner is notified his or her home is being foreclosed on. Angius and Terry were very well aware of the reasons for the personal service requirement, but chose to flout the law for their own personal gain. How many other homeowners have they done this very same thing to; and how much money was made this way?
Kind of gives one a queasy feeling in the pit of the stomach, doesn’t it?
LESSON TO BE LEARNED: If possible, become a member of your homeowners association board, so you can keep track of what is going on. Beware of professional management companies and their hired guns – unscrupulous debt collection agencies. Make sure neither management nor the homeowners association benefits from debt collection.
Also make damn sure you go through your bank statement when it arrives in the mail, *and* check your account(s) register online every few days. After all, most of the time your bills are being ‘processed’ by out-of-state third party vendors whose clients are the corporations, not us.
“Also make damn sure you go through your bank statement when it arrives in the mail, *and* check your account(s) register online every few days. After all, most of the time your bills are being ‘processed’ by out-of-state third party vendors whose clients are the corporations, not us.”
Excellent advice anon! Unfortunately in the case just won against Angius & Terry, the homeowner sent a money order. Does anyone know how one can check to see if a money order has been cashed? Is there a way?
Or never ever own a house where there is an HOA in place. When we were looking at homes last winter, I made sure my agent knew that HOA meant deal killer.
Do HOAs understand or care that when they participate in this type of behavior, they make it less and less appealing to buy in a HOA development and thus shrinking their client base? Does any firm requires consumer purchasing, such as credit card companies, understand or care that they will face the same problems?
[quote]Does anyone know how one can check to see if a money order has been cashed? Is there a way? [/quote] This is what the USPS website ([url]http://pe.usps.gov/text/dmm300/503.htm#wp1150680[/url]) says:
[i]”[b]14.3.9 Payment Inquiry:[/b] A purchaser, payee, or endorsee may, at any time, inquire about payment of a domestic money order by completing, signing, and filing Form 6401 and paying the appropriate fee.”[/b]
Rich, thanks for the information on money orders. I’m not quite sure why this homeowner decided to use a money order, but because of what was at stake, she needed to make sure the money order was cashed. There is no doubt in my mind she will do things differently in the future.
“Or never ever own a house where there is an HOA in place. When we were looking at homes last winter, I made sure my agent knew that HOA meant deal killer.”
I would tend to agree with you, except there are times when a HOA is almost a necessity, such as in the case of townhomes with a common roof, or a development that has a common pool or clubhouse. If you do live in a development with a HOA, beware any management company (and the debt collection agency they choose to affiliate with) that approaches and offers to make life easier for the HOA Board.
Unfortunately there are only three major debt collectors in CA, that perform debt collection for HOAs, and Angius and Terry is one of them. Pretty scary stuff, when they do not follow proper procedure, and someone’s home is at stake. Debt collection is a coldblooded and lucrative business, that really needs to be more closely regulated. Right now, there is essentially no gov’t regulation of the HOA debt collection business.
Another interesting trend that is happening around the country is that of making sure any new developments must have a HOA. Then gov’t services, such as water and sewer, are delegated to the HOA. I’m not quite sure how it works, but the idea is to save the gov’t money. Unfortunately, because HOAs are not regulated either, this becomes a rather frightening prospect.