Massachusetts signs non-judicial foreclosure bill for timeshares! Good news

[timeos2]

for those that pay their bills and want their resort/Association to stay on top of delinquents without the excess costs and time required for traditional, full court process to foreclose.

It includes the ability for timeshare owners to be bidders for any weeks offered under these new rules for foreclosure/sale.

A BIG win for timeshare owners and Associations that now have a new weapon to get control of non-paying weeks quickly and to minimize past due fees.

Great job all that helped get this process enacted.

 

[e.bram]

Link to text of the act????

 

[timeos2]

Link to text of the act????

See the full bill pdf here.

 

[TUGBrian]

I believe this will become commonplace in many states over the next few years.

 

[AwayWeGo]

Possible Down Side. (Really A Stretch, But You Know How I Am About Good News.)

Only potential future disadvantage I can see is the possibility that revenue-hungry local lawmakers will point to the non-judicial procedures for timeshare foreclosures & say (in effect), "See, those individually owned timeshare units aren't really regular real estate after all. So there's no reason not to hit'm with a transient occupancy tax, just like the hotels & motels. The timeshare owners are just tourists, so it's not like they can organize any campaigns against us to vote us out for taxing them. Bwaaah-haah-hah-ha! "

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[Tommart]

Download the pdf

For some reason, I can't download the pdf. Are others able to download this file?

 

[timeos2]

For some reason, I can't download the pdf. Are others able to download this file?

Sorry - server that is hosting the pdf is temporarily off line. It is supposed to be back up shortly (hardware failure since replaced & now awaiting propagation) so check back in the next few hours & the file should be back.

It is too large for an upload to TUG - if anyone else has a server I can send it to temporarily I'd be happy to do so.

UPDATE: Link is working again.

 

[BocaBum99]

How many timeshares are in Massachusetts?

 

[TUGBrian]

you can email it to tug@tug2.net and ill host it.

 

[Carolinian]

I take it that the part some timeshare owners were objecting to that allowed bulk sales of foreclosed weeks as opposed to each week being offered seperately was taken out? If so, this bill is a step forward. If not, it is a mixed back, and I share the concern that possible limitation to bulk sales would allow some unsavory characters to get their hooks far too deeply into resorts.

 

[Tommart]

I was able to download the document

Definitely a step in the correct direction.

The emphasis is on non-payment of mortgage. Note that non-payment of mortgage takes priority over funds owed to the association. If a T/S is sold due to non-payment of mortgage, all past due monies owed the association are waived except the current year normal assessment if the buyer plans to use the unit in the current year.

So if there's a mortgage, the association gets nothing other than the knowledge that future assessments will likely be paid by the new owner.

If there's no mortgage, the association can sell the T/S. In this time of properties selling for $1 on ebay, this may also not result in receiving past due monies and I'm sure there's still additional costs: legal and administrative.

It's unclear to me what defines a mortgage since very few banks use the T/S as collateral. However, I bet all developer loans use the T/S as collateral.

Still, I can't think of a better solution, so this is a step in the right direction.

 

[Carolinian]

This is somewhat the reversal of the situation with local taxes. They take precedence over a mortgage, and m/f should as well. Why should the association suffer by failing to collect m/f due when a developer sits on a mortgage in default without foreclosing?

Definitely a step in the correct direction.

The emphasis is on non-payment of mortgage. Note that non-payment of mortgage takes priority over funds owed to the association. If a T/S is sold due to non-payment of mortgage, all past due monies owed the association are waived except the current year normal assessment if the buyer plans to use the unit in the current year.

So if there's a mortgage, the association gets nothing other than the knowledge that future assessments will likely be paid by the new owner.

If there's no mortgage, the association can sell the T/S. In this time of properties selling for $1 on ebay, this may also not result in receiving past due monies and I'm sure there's still additional costs: legal and administrative.

It's unclear to me what defines a mortgage since very few banks use the T/S as collateral. However, I bet all developer loans use the T/S as collateral.

Still, I can't think of a better solution, so this is a step in the right direction.

 

[Tommart]

Good Question

This is somewhat the reversal of the situation with local taxes. They take precedence over a mortgage, and m/f should as well. Why should the association suffer by failing to collect m/f due when a developer sits on a mortgage in default without foreclosing?

Good question. I suspect that it's those holding mortgages or those associated with those holding mortgages (developers) that have supported this bill.

The more I think about it, I also don't like how the T/S must be auctioned off and the only required notices are to 1. the owner, and 2. an ad in a local paper. So what will happen is the developer or mortgage company will buy the T/S for $1, all association assessments will be waived, and then the developer can sell the T/S for thousands and not reimburse the association.

 

[timeos2]

Possible but only one of many potential

Good question. I suspect that it's those holding mortgages or those associated with those holding mortgages (developers) that have supported this bill.

The more I think about it, I also don't like how the T/S must be auctioned off and the only required notices are to 1. the owner, and 2. an ad in a local paper. So what will happen is the developer or mortgage company will buy the T/S for $1, all association assessments will be waived, and then the developer can sell the T/S for thousands and not reimburse the association.

You are over analyzing this. The remedy for payments past due is for the Association to foreclose after all efforts to collect have come up short. By that time the owner has had plenty of time to pay and not suffer if that is what they want to do. If not previously it was a VERY time consuming and expensive (as in an average of $1000 or more) process for the Association to go to Court through the standard foreclosure process and get that week back so they can get it in the hands of a paying owner as it should be. The deck was stacked too far to the owners (too many hoops & expenses for the Associations) before - now it levels things out a little more.

The Association controls the process so they will be well aware of when these weeks are going to be auctioned and if they want them back to resell that should be possible as they will bid OR another bidder - an owner, the Developer (if they are around) or someone will bid and should they win they become the owner and pay the fees - in some ways better as anyone who successfully bids owns it as of then and owes the fees going forward - that is what the Association wants. If the Association wins then they have to find a buyer so in some ways a bidder other than the Association winning may actually be better. It's not like a bidder can win and not pay the future fees (the past fees are wiped out in the foreclosure no matter who wins the bid so there is no difference there).

In today's environment most developers are looking to sell existing inventory not bid to add inventory. Overall I see this as a much needed improvement to the collection process for timeshares and I do hope other states go the same way soon.

 

[dioxide45]

This is just plain bad. Why is the residential mortgage industry under such scrutiny right now for their foreclosure processes? It is because it has become too easy to foreclose and too easy to not follow procedures thoroughly enough in certain states. Managers signing foreclosure document in "bulk" without making sure that procedures were followed and the proper documents are in place.

Put yourself in the situation of a atruggling owner. In most cases you would be willing to deed back vs. foreclosure. This just makes it easier for the developer to go the foreclosure route instead of offering deed back. Deed back keeps your credit report cleaner than foreclosure.

These laws are never written for the benefit of the consumer.

 

[AwayWeGo]

Timeshare Companies Want Money, Not Deedbacks.

This just makes it easier for the developer to go the foreclosure route instead of offering deed back.

Timeshare companies are in an odd situation when they use mortgage liens as loan collateral on their newly sold full-freight timeshare deeds. That's because the deeds are worth nowhere close to timeshare company prices -- maybe not even worth the 10% down payment timeshare companies take when financing full-freight sales themselves.

The owner stuck owing money on a timeshare bought at full freight is upside-down & under water starting on Day One. It's a tough situation -- for the purchaser and for the timeshare company.

Say you buy a timeshare from a timeshare company for $25,000 or so. Then you lose your job & can't make the payments. So you contact the timeshare company & offer to deed back the timeshare. What's the timeshare company going to say? Something along the lines of, "If we take back the deed, when will you be coming up with the remaining $20,000+ that you owe us?"

Offering deedbacks to timeshare homeowner associations is something else again. If the timeshare is free & clear but the owner is in a financial bind & can't make the annual fee payments, it is possible the HOA can do better by accepting deedback than by siccing bill collectors on the deadbeat & threatening foreclosure, depending on what arrangements the HOA has made with the bill collectors.

Refuse deedbacks under any & all circumstances & risk running up attorney fees & court costs for taking the case all the way through collection action & foreclosure.

Be too free & easy about taking deedbacks & risk owners bailing out in bulk during tough times, jacking up costs for all the remaining owners who don't bail out & potentially taking the timeshare into a death spiral.

It's a difficult balancing act that the timeshare HOA has to perform. Hats off to the HOA-BOD members out there who stick with it & see it through, for the benefit of all us regular, walking around timeshare owners.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[timeos2]

You are trying to "protect" or give benefits to the wrong group!

This is just plain bad. Why is the residential mortgage industry under such scrutiny right now for their foreclosure processes? It is because it has become too easy to foreclose and too easy to not follow procedures thoroughly enough in certain states. Managers signing foreclosure document in "bulk" without making sure that procedures were followed and the proper documents are in place.

Put yourself in the situation of a atruggling owner. In most cases you would be willing to deed back vs. foreclosure. This just makes it easier for the developer to go the foreclosure route instead of offering deed back. Deed back keeps your credit report cleaner than foreclosure.

These laws are never written for the benefit of the consumer.

The first paragraph really doesn't apply. The procedures are spelled out and must be followed. If not it is isn't a legal foreclosure and that will get caught if it's any type of pattern.

As for paragraph 2 if the Association / Resort does not want to offer deed backs they are under no obligation to do so. On the other hand the owner agreed to pay the bills as part of the purchase and IS under obligation to pay. Of course the owner would "prefer" to deed back and avoid a credit hit - they don't get that choice! The law is not meant to benefit the delinquent owner who isn't honoring his obligations. It is meant to help the vast majority of owners who are paying their fees and now need help for their Association to collect from those who aren't paying. It is not to protect the small group that isn't paying but the far larger group that IS.

 

[ondeadlin]

I think this is an excellent development and hope Florida, Colorado and other timeshare-heavy states follow suit.

 

[Tommart]

My First Timeshare

Many associations do not want to receive timeshares from members.

I bought my first timeshare in 1985 in Georgia for $10K.

The developer went bankrupt and fees went up. In 1989, I moved to Virginia. At the time, it was next to impossible to resell timeshares.

I offered to give my timeshare to the Association, but they refused. Said that they had hundreds.

After a couple years of me not paying my maintenance fee, the Association and I reached an agreement. I agreed to pay about two years of fees, if they took my timeshare off my hands.

 

[dioxide45]

The first paragraph really doesn't apply. The procedures are spelled out and must be followed. If not it is isn't a legal foreclosure and that will get caught if it's any type of pattern.

It will matter, today it does matter in residential mortgage. This is why so many lenders have halted their foreclosure processes in many if not all states. Easy foreclosure means they will get sloppy. Is anyone really going to nullify all of those residential foreclosures that have occurred without all the I's dotted and T's crossed? No. A slap on the wrist and some fines is all the lenders will pay, people will still be out of their homes.

The problem is that many will not even care since it is timeshare only and not someone's home.

As for paragraph 2 if the Association / Resort does not want to offer deed backs they are under no obligation to do so. On the other hand the owner agreed to pay the bills as part of the purchase and IS under obligation to pay. Of course the owner would "prefer" to deed back and avoid a credit hit - they don't get that choice! The law is not meant to benefit the delinquent owner who isn't honoring his obligations. It is meant to help the vast majority of owners who are paying their fees and now need help for their Association to collect from those who aren't paying. It is not to protect the small group that isn't paying but the far larger group that IS.

I suspect that this was devised more to help out resort developers to foreclose on mortgages more so than it was to help HOAs with delinquent MFs. The HOAs don't have the big money to bring to the table to lobby for these laws. The developers do. Since they would already be losing their shirts on the foreclosure by taking back something they can't sell, they want to make it as cheap as possible.

This really won't do anything to eliminate fees not being paid. You have to have a buyer for the timeshare unit from the foreclosure. If there isn't one, then the HOA becomes the owner and the rest of the owners are still on the hook for those missing funds.

I am all for cheaper options for the developers and HOAs to foreclose. However, when no one is watching the hen house, it is bad for owners. Without a judicial foreclosure process, there is very little oversight.

 

[dioxide45]

I think this is an excellent development and hope Florida, Colorado and other timeshare-heavy states follow suit.

Florida also passed a similar law. There was a item on our two Florida timeshares related to a non-judicial process for foreclosures. In fact in looking at the two laws, they seem very similar. In both cases, the owner can elect to go with a judicial foreclosure.

 

[Carolinian]

In the county tax analogy, county tax collectors frequently lean on mortgage holders to pay the county taxes, threatening to foreclose the tax lien if they do not. The mortgage holders generally pay and add that amount to the mortgage rather than have their security foreclosed.

It looks like with this bill being upside down and the mortgage taking precedence over the m/f, the HOA's would be at the mercy of the developers. It should be the other way round.

You are over analyzing this. The remedy for payments past due is for the Association to foreclose after all efforts to collect have come up short. By that time the owner has had plenty of time to pay and not suffer if that is what they want to do. If not previously it was a VERY time consuming and expensive (as in an average of $1000 or more) process for the Association to go to Court through the standard foreclosure process and get that week back so they can get it in the hands of a paying owner as it should be. The deck was stacked too far to the owners (too many hoops & expenses for the Associations) before - now it levels things out a little more.

The Association controls the process so they will be well aware of when these weeks are going to be auctioned and if they want them back to resell that should be possible as they will bid OR another bidder - an owner, the Developer (if they are around) or someone will bid and should they win they become the owner and pay the fees - in some ways better as anyone who successfully bids owns it as of then and owes the fees going forward - that is what the Association wants. If the Association wins then they have to find a buyer so in some ways a bidder other than the Association winning may actually be better. It's not like a bidder can win and not pay the future fees (the past fees are wiped out in the foreclosure no matter who wins the bid so there is no difference there).

In today's environment most developers are looking to sell existing inventory not bid to add inventory. Overall I see this as a much needed improvement to the collection process for timeshares and I do hope other states go the same way soon.

 

[timeos2]

Now the hand can be played

In the county tax analogy, county tax collectors frequently lean on mortgage holders to pay the county taxes, threatening to foreclose the tax lien if they do not. The mortgage holders generally pay and add that amount to the mortgage rather than have their security foreclosed.

It looks like with this bill being upside down and the mortgage taking precedence over the m/f, the HOA's would be at the mercy of the developers. It should be the other way round.

There is no option regarding mortgage vs fees. Any true mortgage on the property will take precedence over the claim for fees. And taxes come before both. That is just the way the law has declared it will be. Remember too that by reducing the time and cost involved to foreclose the Associations have a better weapon against developers who try to sit on delinquent mortgages as a holding dump for inventory nthey don't need yet but can get around paying maintenance on as they are not the owner yet but know they could be if they foreclose.

Now the Association can move to make their claim (at a lower cost) to spoil that trick as the developer will lose the week when they go to claim it back. It should force the hand of developers to move on foreclosures themselves OR let the Associations take it. Again, either way, the resort starts getting fees again and that is what really counts.

No bill or law is ever perfect in every way but this one is a great new tool for timeshare Associations in the collections game.

 

[TUGBrian]

uploaded, sorry for the delay over the weekend!

http://tug2.net/timeshare_advice/foreclosure.pdf

 

[e.bram]

I would not call it non judicial, maybe a summary procedure with reduced judicial procedure requirements. People's rights still have to be protected. this is the USA.