Part III: Handling Collections with Care

March 26, 2020

This is the third part of a planned series of posts advising our community association clients and their management companies how to proceed and conduct business during these unprecedented times. 

As the crisis continues across America and millions are losing their jobs or facing reduced pay or hours, the White House has announced steps on March 18, 2020 to halt foreclosures on all government-backed mortgages. President Donald Trump  directed the Department of Housing and Urban Development to suspend all evictions and foreclosures on HUD-backed properties until the end of April, and the Federal Housing Finance Agency has further directed Fannie Mae and Freddie Mac to suspend all foreclosures and evictions for at least 60 days. With people struggling the make ends meet, these seem like sensible steps to mitigate some of the damage caused by this pandemic. However, this government directive doesn’t apply to private lenders or to community associations, but should they follow these same guidelines?

Our law firm handles foreclosure actions for creditors, including primarily community associations. At this point in time, everyone should recognize the severity of the looming recession caused by the spread of COVID-19. While we believe in zealously advocating and pursuing our clients’ rights as creditors, these are troubling and uncertain times, and we would generally recommend adopting the same 60-day moratorium on foreclosures. After this passes and a new normal is established, no one will want to appear in court and explain to a judge that you filed the lawsuit while half of the country was self-quarantining to prevent the spread of a deadly disease.

Ultimately, the decision may, as a practical matter, be out of our clients’ hands. Many courts are limiting hearing times and others, like Broward and Miami-Dade County courts, are closed completely. This will create a backlog in thousands of civil matters and will cause delay in obtaining foreclosure judgments anyway.

Things are changing daily as legislature is being pushed through both chambers of Congress to grant relief to those most affected. As of this writing, there’s nothing directly on point preventing community associations from levying and collecting assessments. However, if you are a creditor such as a community association, we would generally recommend considering payment plans of terms longer than would typically be agreed upon and if requested in writing, granting grace periods to allow people the opportunity to get back on their feet. Before taking any such action, we recommend you speak with your attorney to ensure you are in compliance with your collections policy and/or your governing documents.

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