Home > 2011 > Mortgages

Las Vegas Foreclosure Mess Ends in Bitter Duel

Advertiser Disclosure Comments 1 Comment

No! We’re the Good Guys!

In addition to calling the other side names, both investors and debt collectors argue that they represent the best interests of regular homeowners. Without debt collectors HOA’s would have no mechanism for collecting unpaid dues, the collectors say. That deprives associations of money they desperately need to maintain their subdivisions, attract new homeowners, and hopefully escape the housing recession.

“These speculators want to come in here and make huge profits, and forget what happens in the neighborhood. They don’t care,” says Stone, of Nevada Association Service. “If they’re unwilling to pay their fair share, everybody else in the community has to pay more.”

[Related Article: Florida AG Details Forgery & Deceit in Mortgage Process]

Local homeowner advocates agree with collection agencies that investors should pay the fees. The HOA’s must be paid. And if the dues aren’t paid by investors, then existing neighbors who have done nothing wrong and stayed current on their mortgage payments are left to subsidize the investors by shouldering higher dues.

“In the end, the investors just have to pay,” says Burks.

Besides, Burks and the collectors argue, it’s not as if investors don’t now about the collection fees before they buy a house. The HOAs’ liens are disclosed during the purchase process.

“They’re acting like this is all a surprise, as if we’re trying to scam them,” says RMI’s Parker. “There’s no surprise here. These speculators know exactly what liens exist on every house before they buy it.”

Meanwhile, investors insist that by finding new owners for foreclosed houses, they play an important role in stabilizing HOA finances and catalyzing the recovery of the Las Vegas housing market. Charging them fees to collect debts they didn’t create isn’t just illegal, they argue—it’s counterproductive.

“They want to charge these fees not because it’s right, but because it’s convenient. Because they think the investors have the money to pay,” Adams says.  

A Huge Mess

The argument began last fall with a lawsuit by Las Vegas-based attorney Puoy Premsrirut against a debt collection company for allegedly trying to collect illegal fees. Class-action lawsuits against multiple collection companies followed.

Investors asked the Financial Institutions Division to strike down the fees. Instead, the division set a cap of $1,950 for fees related to unpaid HOA dues. The cap satisfied some collection agents, including Stone. But it enraged others, who sued the division over the cap, upping the ante in the legal battle.

Meanwhile, the collectors filed a lawsuit against Premsrirut and other investors, alleging that their onslaught of lawsuits constituted an abuse of the legal system.

“All of their lawsuits have been struck own, and every time they lose they just file another one somewhere else,” Stone says. “It’s utterly ridiculous. They need to stop.”

[Related Article: FICO Releases Research to Profile Strategic Defaulters]

The allegation turns the investors nearly apoplectic.

“When is it an abuse of process to demand due process?” Premsrirut says.

The legal battles are likely to wind up before the Nevada Supreme Court, both sides agree. Meanwhile, investors, collection companies and HOA’s all are lobbying state legislators for bills that would alternatively revoke the cap, explicitly include collection fees in super-priority liens, or ban the fees altogether.

“Oh yes, it’s definitely complicated,” Burks says. “There’s a lot of money at stake, not to mention the future of these neighborhoods.”

Image by KWDesigns, via Flickr

Pages: 1 2 3

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team