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New payment order in SB 406 aims to stop attorney-fee-driven foreclosures
Summary
Presenters said SB 406 establishes a payment 'waterfall' that directs homeowner payments first to regular assessments and dues before attorney fees or fines, an attempt to prevent debt cycles that previously pushed some homeowners toward foreclosure.
Presenters identified one of the law’s central consumer protections as a new priority (or 'waterfall') for how homeowner payments must be applied. Marvin Arrington Jr. said the schedule forces payments to be applied to regular assessments and dues first and pushes attorney fees, late fees and interest lower in the priority order—intended to prevent the common scenario in which payment is consumed by legal costs and leaves a homeowner perpetually behind.
Karel Driscoll Sr. and Arrington both urged homeowners that if they receive large unexpectedly itemized bills they should demand an explanation and keep paperwork. Arrington emphasized that attorney fees must be itemized and approved by an administrative law judge or court before they can count toward collection thresholds that might lead to lien recording or foreclosure.
