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...From the Third Party
by Linda George
President
Crawford Associates, Inc
If I could write a letter to every Vacation Resort Developer, Project Director, Lender or Servicer, Association Board of Directors and Management Organization, it would recommend forming a close relationship with their third party collection agency, and if they don't have a third party agency - get one.
The Resort Developer has invested enormous time and expense to open or buy into a property. Careful considerations were given in the selection of a Project Director, a results proven Sales Manager was recruited and an aggressive Marketing Firm was contracted.
Serious negotiations were made with Lenders or Portfolio Servicers with collection services often included in the negotiated agreements - as a matter of convenience - not careful decision-making, a potentially costly convenience.
Of course getting sales offices operating at full capacity is the priority and demands the most attention in the beginning. Simply monitoring delinquencies in the loan portfolio at six-month intervals will be indicative of when collection issues should be reviewed or revised. Recognizing that it is not possible to continue operations in the same manner when ownership grows from 500 to 1500 to 5000 will also dictate when collection issues become a priority. Where funding is arranged based on recourse loans, a third party agency will protect your interest with reduced buy backs. (If a lender is guaranteed payment, where is any incentive for collections?) More than one development has failed due to the high number of buy backs charged against new sales proceeds. The resort developer should always maintain control of mortgage collections and have a third party in place early in the program.
A third party agency serves as the first line of defense against all types of resort problems. High delinquency rates should be region specific or disaster related. If there are influences other than events such as layoffs in Detroit, earthquakes in California, or hurricanes in Florida, - your third party will know. High numbers of cancellations in rescission may be due to misrepresentation in sales, - your third party will know. Low sales results in upgrade or reload promotions may be simply due to a lack of customer service, - your third party will know.
The Project Director knows that sales build the resort and that the number of unresolved problem issues can determine a successful project. The Project Director working closely with the third party avoids the delinquent and confrontational owner, the problem is resolved, and a successful project is attained with minimal effort. Since collections is where most problems surface, your third party can identify, make suggestions or recommendations and be a part of the solutions. Your work will be more efficient by direct contact with the third party agency, who will detail the problem issue, follow your instruction and reply to the disgruntled owner, further promoting success.
The Lender or Servicing Agency very likely employs highly qualified collectors, yet outsourcing resort collections to a third party with extensive timeshare knowledge may be to their advantage. Many delinquent owners are questioning their own decision to purchase, a knowledgeable third party collector can re-sell the owners, encouraging participation and support of their resort and timely payments. Few financial service agencies provide the training needed or allow the time in their automated systems for the collector to become involved in resolving owner issues.
The Board of Directors and Management Company have written regulations and Association By-Laws providing excellent direction for the resort operation. They have the extensive task of educating their resort owners of these rules and regulations. In contracting a third party agency, due diligence must be exercised to avoid excessive charges passed on to the delinquent owner.
Annual Maintenance fees and/or tax delinquencies are the true pulse of a resort operation. That heartbeat is not recognized when resort staff is assigned collection duties, they lack the time, the tools and the training required to monitor such vital activity, while your third party is aware of every beat.
Outdated ownership records are a large contributor to high Association delinquencies. Where owner cancellations, foreclosures, and deed backs are not removed from ownership records, the delinquency percentages will be distorted. Your third party agency will identify those records requiring changes as well as recommend those requiring legal action.
Serious failures begin with a breakdown in critical communication functions. Lapses between the offices of the Developer, the Association, the Management, the Billing Services will be bridged by your third party agency and through cooperative effort every office and owner will be better served.
All Resort Operations should be aware that your third party agency possesses this valuable information only as a by-product of effective collection techniques. Congratulations to those who utilize this vital resource and recognize the importance of contributions...from the third party.