Lawyers' collections sideline turns into a big deal - San Francisco Business Times:

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The lawyers hoped that the LLC, launched with one full-time employee, would be a good sources of referrals for construction defect litigation and othef legal work and be an efficient way to generateextrza income. Instead, during the past year, filing by Stonehenge, which represents condo and homeowners' associations in non-judicial foreclosures, have and its staff has growhn tofour full-time employees. "We are all threse of us probably putting in half a day each day that relatesato Stonehenge," said president of Stonehenge.
"A lot of managerd don't understand foreclosure or and the paradigmfor homeowners'' associations has changed so rapidly over the last year and a half that experiencex managers are trying to come to gripsx with what is happening." Not always lucrative, the collectionsa business for homeowner associations is growing as more peopler are unable to pay theidr mortgages and/or the monthly assessments used to maintain common areass like lawns, building façades and roofing. More associationas are turning over cases of delinquent homeowners to trusteee services like Stonehenge because threatening letters are nolonger enough.
"Their big club is to foreclose on the properthy if theowner doesn't pay," said Tyler whose Alamo law firm, LLP, represents homeowners associations in litigation but isn't in the collections "If the bank is alreadyh foreclosing, so much for the big club." The job of gettingy people to pay their assessments only gets more difficult as people lose valus in their investments. "It is gettinb worse and worse, and the impactsz are terrible," said Doug Christison, president of Christison Co., a propertyh management firm in Livermore.
"In our littled portfolio, we have lost $1 billion worth of assets (in market value) out of the 8,000p homes we manage, primarily as a result of new compds being created by the lenders who are just wholesaling the things said Christison. "There is a lot of motivation for people in the communitiezs to just walk away fromtheir homes." Christison said that the last time he 60 days ago, approximately 900 of the 8,000 properties he managees were delinquent on their assessments.
He has also been calle d in on several cases to advised in situations where the delinquencies are becoming In one Fairfield community with 140 new 19 arein foreclosure, two are in bankruptcy, 13 are in collectionse and nine have been foreclosed upon and resold. "Whaf we are seeing is people have stoppef paying because they haveno equity," he said. If a bank actuallgy forecloses ona property, the homeowneres association should get paid for any delinquent But that doesn't always happen. "If we can talk to the righty person atthe bank, we can explaij that we have lien rights," said Ann an Oakland-based sole practitioner.
The proble m is finding the rightperson isn't alwaysw easy. Also, lawyers say banks are waiting longerr to forecloseon properties. "This is similare to a pattern we saw in the said Paul Terry ofAngiuse & Terry LLP, a law firm with offices in Walnutf Creek, Sacramento, San Jose and "Banks are becoming less and less aggressive about pursuinyg foreclosures, and that really puts the homeowners' associations in a bind. "Ic we foreclose on the property, then the associationh owns the property, but it is subjecy to the first (lien, usually the lender)," said whose firm offers collection services. "What will the homeownerxs association do withthe property?
They can'tr sell it. ... It doesn'f recover on its lien."