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ARDA

Trade & Regulatory Bodies: Can You Trust Them?

A couple of weeks ago Inside Timeshare published two articles, the first was on Celebrity Endorsements, the second on Sponsorship Deals. Both painted a rather sorry picture, but it doesn’t end there in the battle to get as much money out of you as possible, regardless of what the product is. There is another form of endorsement, “TRADE BODIES” and so-called “REGULATORY BODIES”.

You have all seen them, in fact, there has been a proliferation of them over the past few years, they may be small, and aimed at a specific trade, for instance, self-employed plumbers, gas fitters and a host of other things. Their purpose is to give you the confidence to employ them.

The person wanting to become a member will usually have to prove their quality, customer satisfaction and also abide by a code of conduct and ethics. Usually, the new member will be under a probationary period, then if the trade body is satisfied with how they conduct business, they will allow them to display the logo etc.

Generally, these small trade bodies work very well, rogue traders are normally weeded out fairly quickly, after all, the other traders will definitely not be happy that their livelihood is jeopardized by a rogue.

Unfortunately, it cannot be said for all Trade Bodies, it would seem that the larger and more wealthy the “TRADE”, they will do nothing to protect the consumer.

OK, you’ve guessed it.

We are talking about the RDO (Resort Development Organisation) in Europe and ARDA (American Resort Development Association) in the US. Today we will focus on the RDO.

Trade and Regulatory Bodies as we have said are there to promote good practice and quality, they have their “Codes of Conduct & Ethics”. They say they will sanction any member who breaks these rules. But do they?

Here is where I would like to bring in the subject of Silverpoint, formerly Resort Properties, the CEO was Mark Cushway. We all know the story, it has been published on Inside Timeshare, the Press, TV, and numerous forums.

How many people were duped into forking out huge sums (into the millions of Euros) on the “products” that the company peddled, and we must not forget the “PARENT” company, The Limora Group? It was the “Empire” of the late Robert “Bob” Trotta. I know the spelling for the surname is different, but it does conjure up a favourite “good villain” in a great British comedy show.

Joking aside, you only have to search Inside Timeshare to get the whole sorry tale.

This went on for years but did the RDO do anything even though both companies were “Paid-up Members”, and surely they must have received many complaints from consumers?

The answer my friends is a resounding NO!

According to the RDO “Code of Conduct & Ethics, they will not mediate in any dispute between the consumer and the member!

What a get out!

Now we introduce you to one of the former Directors of the RDO, yep, it’s our old friend Mark Cushway. As the CEO of Silverpoint/Resort Properties and under the control of The Limora Group, he was a director of the RDO until he resigned a few years ago. It should also be pointed out that Silverpoint/Resort Properties were reputedly the largest contributors to the RDO funds.

Say no more.

Mark Cushway, Former CEO Silverpoint and Former Director of The RDO

Several years ago Inside Timeshare published the article “A New Member to EGTBW”, it was a spoof article written to show how much of a joke these trade bodies are. EGTBW stands for the European Guild of Timeshare Blog Writers, it is affiliated to the IATBWG, the International Association of Timeshare Blog Writers Guilds

The “Code of Conduct & Ethics” for this article was actually inspired by the RDOs own codes and their unwillingness to act on behalf of the consumer. Everything they seem to announce and publish appears to those of us who follow these events as nothing but “Smoke & Mirrors”.

Yet they have the ear of the lawmakers, their lobbying machine is very efficient, to the point they influenced the House of Commons and the House of Lords into the very watered down English Timeshare Laws, in other words, the very basics. These laws were initially instigated by the E.U. Timeshare Directives to protect consumers and had to be placed in domestic law. Spain so far is the only European Country whose lawmakers have ignored the lobbying and put into place very strict regulations protecting the consumer of timeshare. Well, in Europe, Spain was the “Hotbed” of timeshare sales.

This is quite clearly shown with all the timeshare companies that operate in Spain who are now losing in the courts on a daily basis. It is costing them Millions of Euros, yet what do we hear from the “Trade Body”? It’s the Judges, they have got it wrong, they are interpreting the law wrongly!

What a joke, attempting to back up their “members” who are on the ropes and losing hand over fist and they blame the judges who ruled on 130 cases at The Supreme Court, Spain’s highest place of justice. If they were a genuine “Trade Body” shouldn’t they be on the side of the consumer and either make the timeshare resorts comply with the laws of the country they operate in or sanction them?

After all, their own “Code” does say that all members must abide by the jurisdiction and laws of the country they are operating in. You can’t get any plainer than that!

Once again, Inside Timeshare leaves it up to you the reader to decide, we welcome your comments so please do use the contact page or comments section. I’m sure that we will receive some good ones.

In the link below is the original article “A New Member to EGTBW”, which was first published on 14 June 2016, wow, that long ago. Have a read it will make you chuckle, but there is a very important message in there.

Inside Timeshare must point out that at the time of writing the resort mentioned had ceased to be a member. This fact was published later, but it still begs the question, if they will not protect the consumer from their own members, why did they not help consumers against the non-member, in other words, the “rogue” trader?

https://insidetimeshare.com/new-member-egtbw/

Below is the link to “Exclusive Breaking News: The Truth Behind Silverpoint Exposed.” It is a six-part article that was published between 5 June 2019 and 24 June 2019. The link also covers the Azure liquidations, they are also part of The Limora Group and sister company to Silverpoint.

https://insidetimeshare.com/page/1/?s=exclusive+breaking+news

Enjoy your reading. It certainly is an eye-opener.

If you purchased a timeshare, either fixed week, points, floating weeks or fractional and would like to know if your contract is illegal under Spanish Timeshare Laws, please use our contact page and Inside Timeshare will get back to you.

Friday’s Letter from America: Timeshare Foreclosure

Welcome to this week’s edition of Letter from America, this week Irene Parker answers a question asked by many consumers when it comes down to loans/mortgages for the purchase of timeshare. This is very much a problem for our US readers as in Europe and especially in the UK all loan agreements are considered personal loans to purchase a product, any default on the loan agreement is a civil matter and is dealt with by the County Courts. The courts can order the repayment or send in the bailiffs to seize personal property to the value of the loan. The timeshare will not be seized as the loan is not collateralised by the timeshare, after all, it is worthless.

There are not many figures available on County Court Judgements made for defaults on these loans, mainly because they are listed as personal debts not attached to anything but a debt to the lender. For instance, you may have taken out a loan for home improvements, this is treated exactly the same as a loan for timeshare. It should also be pointed out that a County Court Judgement commonly known as a CCJ destroys any credit rating and will prevent you from getting any further finance. Now, considering the average age of timeshare purchasers, they are of a generation that will pay off these defaults as a debt is a debt and to receive a CCJ is out of the question. It should also be pointed out that even if consumers receive a CCJ, they are unlikely to advertise the fact on these timeshare forums, after all, it could be very embarrassing.

Is a Timeshare Foreclosure an Installment Loan Foreclosure or a Mortgage Foreclosure? 

See the source image

Is a Timeshare Foreclosure Considered Mortgage Foreclosure? 

https://gustancho.com/timeshare-foreclosure-considered-mortgage-foreclosure

On the credit report yes, but not with mortgage lenders:  Per HUD mortgage lending guidelines, a timeshare is not treated as a regular foreclosure and is treated as consumer debt. 

The U.S. Department of Housing and Urban Development (HUD), the parent of FHA) classifies timeshare mortgages as installment loans and not real estate loans.

By Irene Parker

July 23, 2021

Over the past year, there have been six disturbing reports that indicate timeshare developers are becoming more aggressive in pursuing members who default on loans. If the reports listed below obtained from credible sources are accurate, timeshare buyers should NEVER finance a timeshare, and timeshare attorneys will be provided substantial job security. If you get sued, you need an attorney. There is nothing to prevent a timeshare company from suing a member, but it is more difficult to collect on a timeshare judgment as the loan is not collateralized with anything but the timeshare.

Last week on TIMESHARE TALKS Jessica Burke of Virginia Beach Timeshare Rentals discussed the benefits of renting timeshares. Renting avoids the initial outlay, and more importantly, gives the consumer time to evaluate different timeshares so as to make an informed decision as to which timeshare might be right for their family. Host John Raymond is a licensed timeshare broker and founder of Resort Reseller. Timeshares can be purchased on the secondary market for a fraction of the cost.  

https://tarda.org/f/should-i-buy-a-timeshare-or-rent-one

The lead spokesperson for ARDA-ROC, the timeshare industry lobby’s consumer advocacy arm, encouraged judicial foreclosure in about-face quotes:

“The best thing we can do with exit (is) judicial foreclosure, ruin the credit and enforce the contract,” said Ken McKelvey, chair of the American Resort Development Association-Resort Owners Coalition, according to letterhead minutes of the April 10, 2019 ARDA-ROC meeting.  (Contacted about the meeting notes, ARDA did not dispute their authenticity but said that in the minutes, McKelvey’s quotes were taken out of context.)

At a 2019 Florida legislative workshop I attended, Mr. McKelvey testified:  

“Most of the developers I know and certainly most of the timeshare managers I know, and I managed timeshare properties for thirty years… every single resort had a dissolution policy, every single one (one). There was a way to get out. You had to come to your management company, and based on what the board of directors instructed us to do in the terms if they had to pay a fee or if they had to be current, whatever those situations were, we did not have a one that did not have a dissolution policy and a hardship policy….” 

Timeshare members donate $5 to $10 per contract to ARDA-ROC in mostly “opt-out” donations. These donations are not as voluntary as they sound. When I asked that the $7 not be charged to my credit card along with my maintenance fees, it was charged anyway. When I called to ask that the $7 be removed, I was told they had to fill out an internal form to do so. That was back in January. Another member recently reported they had to call three times to have the $7 removed. Collectively, ARDA-ROC raises approximately $5 million a year from members.  

Following are five additional disturbing reports:

  1. One developer’s contract used to specifically state that they do not pursue summary judgments. That language has been removed.
  2. Eric Olsen, an attorney of 42 years, was quoted in Kiplinger, to the ire of timeshare developers, when asked what happens when someone stops paying: “I ran this often-asked question by Salem, Ore.-based attorney Eric Olsen, founder of HELPS, a national nonprofit law firm that helps lower-income seniors with debt they can’t afford to pay. Olsen concluded our interview by urging readers to, “Consider walking away from the timeshare, as they generally have no value. Stop paying and ignore their communications.   It will eventually get foreclosed and owing any deficiency is highly unlikely.” Kiplinger, April 26, 2021  
  3. Westgate’s VP of Mortgage Services stated in recent court documents that Westgate “probably” has a 30% default rate. Westgate’s lenders can’t be happy with that high default rate. Other developers have default rates that exceed 20%.
  4. Hilton Grand Vacations and Orange Lake/Holiday Inn have sued members defaulting on loans, according to one exit provider.
  5. Another source reported an upsurge in attorney hiring.    

What does this mean to timeshare members and owners?

According to HomeGuidesSF:

The company may sue you in civil court to obtain a judgment. If the judge issues a judgment against you, the management company may garnish your wages or levy your bank account to get the money you owe.

Deeded timeshare owners face a different dilemma. If you stop paying on your timeshare loan, you face foreclosure. Foreclosure is the process whereby the lender files to take possession of the property and sell it at auction to recover the money you owe. There are two main types of foreclosure: judicial and non-judicial foreclosure. In a judicial foreclosure, the lender files a foreclosure lawsuit and takes you to court. The judge may issue a deficiency judgment for the remaining balance due after the auction. A non-judicial foreclosure is basically a paperwork shuffle. Your contract authorizes the trustee to sell the timeshare in the event you stop paying on it. You receive the official Notice of Default and the Notice of Sale. In California, the majority of foreclosures are non-judicial foreclosures where the lender cannot receive a deficiency judgment after the sale of the property.

https://homeguides.sfgate.com/can-sued-not-paying-timeshare-51679.html

Yahoo Finance reporter Abigail Fisher recommends timeshare stocks because consumers are tricked into signing contracts they can’t get out of: 

Best Stocks to Buy According to Hedge Funds

We find evil companies to be a very rewarding hunting ground to uncover long-term stock winners. In our opinion companies like Philip Morris (PM), Facebook (FB), Apple Inc. (AAPL), Alphabet (GOOGLE) are evil companies that delivered 1000% or more gains to their investors.

In this article we are going to look at another set of evil companies that use high pressure sales tactics to trick consumers into signing complex long-term contracts that they don’t understand: timeshare marketing companies. Check out this Reddit post where the user is asking several questions about Wyndham timeshare cancellation. This person was able to cancel and receive a full refund, but many consumers don’t cancel within the 7-day or 10-day window specified in their contracts.

https://finance.yahoo.com/news/best-timeshare-stock-buy-according-135051667.html

How would this reporter feel if the buyer tricked, was her grandmother? Tiffany’s parents were kept for 11 hours, their IDs withheld. They lost their two deeds they had since 1998, and $34,000. They were told that if they didn’t convert their deed to points, maintenance fees would increase from their current fees of $2,000 to $6,000. The transaction resulted in maintenance fees of $6,000 which they could not afford. Tiffany’s interview: 

https://tarda.org/f/how-giving-up-deeded-timeshares-turned-into-tragedy

Many timeshare members and owners, who report unfair or deceptive sales and marketing practices, are senior citizens in their 60s, 70s, some in their 80s and 90s. They have maintained lifelong high credit scores, but are faced with little choice but to default on a timeshare loan if the resort dismisses their complaint because they signed a contract. There is little to no secondary market. Coupled with interest rates ranging from 12% to 20% (higher if credit card financing), a timeshare can become a financial nightmare. About a third of those reaching out are younger. The youngest was 19 and pregnant when she signed a perpetual timeshare contract at midnight – after a six-hour presentation.

Timeshare members can negotiate directly with their resort to resolve a dispute, but expect to be challenged with: 

  • You signed a contract,
  • Your allegations are unsubstantiated, 
  • We are not responsible for what our sales agents say,
  • You didn’t question this on the recorded closing (because you believed the sales agent or were coached on what to say or not say). 

How can this posturing and ongoing war between developers and those providing exit services be healthy for the timeshare industry? 

People, members of the media, and even the Federal Trade Commission have started addressing why thousands of members reach seeking release from an unwanted timeshare. The FTC lists Timeshare Sales at #7 on their current Top Ten Scam list and Timeshare Resales (fake buyers) #10.

Related Articles: FTC:  Timeshares: Yes? No? Maybe?

https://salinapost.com/posts/5de93b95-4ba0-4acb-8527-80dd7effccaf

Top Ten Scams

https://www.aarp.org/money/scams-fraud/info-2020/ftc-top-scams.html

Senior Defaults

https://www.linkedin.com/pulse/senior-timeshare-defaults-irene-parker/

HOAs Benefit from Onsite and Offsite Timeshare Resale Programs

https://tarda.org/f/hoas-benefit-from-onsiteoffsite-timeshare-resale-programs

Thank you Irene, a very interesting article and I hope it helps to answer some of the questions we receive.

It should also be pointed out that in the UK, one bank, Shawbrook Bank, did acknowledge a few years ago that they did not carry out their due diligence when authorising timeshare loans, meaning many agreements were signed without the affordability checks. The bank set aside around  £9 million to cover any defaults on these loans as they would have had great difficulty in enforcing these loan agreements in the County Courts. The CEO at the time was forced to resign as he was the one that arranged the agreements with the timeshare companies.

Another point is all timeshare sales companies must be authorised in order to broker these loans, before April 1st, 2014 these would have been authorised by The Office of Fair Trading and from that date by the Financial Conduct Authority. A case that Inside Timeshare has been following was the validation of these agreements by Barclays Partner Finance for loans brokered by Azure Service Ltd who were not authorised. This validation order would legalise the loan agreement and make it enforceable in law.

Inside Timeshare has already uncovered many timeshare companies who brokered loan agreements with various lenders and have found that the vast majority have never been authorised. This investigation is ongoing and is being used to end loan agreements.

That is all for this week, have a great weekend, and join us again next week for more news and information on the murky world of timeshare.

Friday’s Letter from America: Exit Industry on Trial.

Welcome to this week’s edition of Letter from America, today our regular contributor Irene Parker and the story on the legal battle between Westgate Resorts and Timeshare Exit Team. The number of “exit” companies coming into existence has rattled the industry, not just in the US but also in Europe, all as a result of the industry making it very hard or almost impossible to terminate a contract and membership. So is the industry to blame for creating a problem in the first place?

Westgate Resorts v Timeshare Exit Team – Settled

Case 6:18-cv-01088-GAP-DCI

http://flowjournal.org/wp-content/uploads/2013/10/Image-1-The-Queen-of-Versailles.png

The Queen of Versailles Mansion built by Westgate’s Founder

By Irene Parker

July 16, 2021

The jury trial of Westgate Resorts v Timeshare Exit Team (TET), filed July 9, 2018, was scheduled to begin Tuesday, July 13, 2021. I had intended to attend the trial, but the parties settled. Settlement terms are confidential and neither side will comment on the outcome. 

The crux of the argument was whether TET and their agents instructed or influenced owners to stop making payments. Also at issue was whether TET violated the Florida Deceptive and Unfair Trade Practices Act. Westgate sought to recover the balances on the unpaid mortgage and maintenance and tax fees caused by TET’s alleged interference. 

TET contended that as agents of their customers, they were privileged to interfere with Westgate contracts. According to the standard federal jury instructions, if a jury finds that a third party gave honest advice and that it was in a timeshare owner’s best interest to breach a timeshare contract, then the third party cannot be held liable for tortiously interfering with the timeshare contract.

Timeshare Wars

Given the volume of lawsuits that have been filed against exit providers, including attorneys and law firms, what seems to really be on trial is the legitimacy of the exit industry. Should disgruntled or desperate members be allowed to have professionals help them try to extract them from a timeshare? 

Making the wrong decision to buy a timeshare can be devastating. Westgate’s corporate representative in court documents stated that Westgate’s current default rate is approximately 30%. A timeshare contract typically exists in perpetuity, with little to no secondary market. Unaffordability is exacerbated by an interest rate typically financed at the highest rate allowed, 17.99%. 

The resale market for timeshare properties is almost nonexistent. An example provided in court documents showed the median purchase price of a timeshare in Osceola County in 2016 was $22,990. The average resale price, two years later, was approximately $10. 

What Happens When a Westgate Owner Defaults?

According to Joint Pre-Trial Statements – not much happens. 

Out of 621 original owners, Westgate only brought foreclosure proceedings against 244 accounts. Of the 86 remaining owners, only four testified they were foreclosed. With respect to the 86 owners Westgate decided to foreclose upon, none testified that their credit was damaged as a result of nonjudicial foreclosure, or were aware of any such impact. Westgate had not sought deficiency judgments as a matter of policy and is not entitled to under Florida law and the law of almost every state. 

Westgate could change its policy to pursue judicial foreclosure and seek deficiency judgments. This would allow them to place liens on real property or garnish wages, etc. 

Nonjudicial foreclosure is quicker and costs less than judicial foreclosure. Non-deeded points, rapidly replacing deeded timeshares, are not eligible for judicial foreclosure. The buyer is a “member” with no beneficial interest in real property. However, that member could be sued for the balance due on a promissory note.  

ARDA-ROC encourages judicial foreclosure according to letterhead minutes of the April 10, 2019 ARDA-ROC meeting at ARDA’s World annual conference. ROC stands for Resort Owners Coalition, the Owners’ advocacy arm of the timeshare industry lobby. Kenneth McKelvey is Chairman of ARDA-ROC.

“The best thing we can do with exit (is) judicial foreclosure, ruin the credit and enforce the contract,” McKelvey said. 

This is in contrast to how Mr. McKelvey testified at a Florida legislative workshop March 12, 2019: 

“Most of the developers I know and certainly most of the timeshare managers I know, and I managed timeshare properties for thirty years… every single resort had a dissolution policy, every single one (one). There was a way to get out. You had to come to your management company, and based on what the board of directors instructed us to do in the terms if they had to pay a fee or if they had to be current, whatever those situations were, we did not have a one that did not have a dissolution policy and a hardship policy….” 

Reports from Westgate owners 

Out of 18 Westgate owners who contacted me or another volunteer as this lawsuit worked its way to trial, only five were able to exit their timeshare. Several had no outstanding loan. I advised one couple, both diagnosed with cancer, to contact Westgate’s Legacy Department via ARDA’s Responsible Exit website. They reported back that the Legacy representative transferred them to a supervisor who informed them, “We don’t take timeshares back and that’s not our website.” I told them about this lawsuit. They reached out to one of the attorneys involved after we discovered a Resort Trades article that listed Westgate as a founder of ARDA’s Responsible Exit program. This couple was ultimately able to relinquish their timeshare. 

Another owner, aged 90, and his wife, are currently in default because Westgate contested their paying the broker who found a buyer his $800 commission.  

The Queen of Versailles and Property Man     

My intended retirement to move to Florida and return to my first occupational love, teaching piano lessons, was disrupted in July of 2015 when I turned on the television at a resort in Orlando and saw the Queen of Versailles mansion pictured above. The show was Property Man on FOX, hosted by the late Las Vegas attorney Bob Massi, who sadly died of cancer in 2019.  The Queen of Versailles is a documentary about Westgate owners, David and Jackie Siegel’s palatial 90,000 square foot home. The documentary took Best Director at Sundance one year

I had just endured a pathetic sales presentation experience. I wrote to Mr. Massi about my experience. Remarkably, a FOX producer responded asking if I would be willing to be interviewed. The producer said the show had not intended to be about timeshare, but they were flooded with timeshare complaints. Not wanting to appear on national television unprepared, I began what has turned into a seven year effort to alert potential timeshare buyers as to the pitfalls that can occur when not enough due diligence goes into the decision to buy a timeshare. 

Timeshare resale brokers I’ve spoken with, who charge no money upfront to list a timeshare, refuse Westgate listings due to obstacles they say are placed in their way. Resorts that do not allow a secondary market breed generations who want nothing to do with timeshare after hearing parents and grandparents bemoan their difficulty relinquishing a burdensome timeshare.  

TIMESHARE TALKS is an interactive YouTube forum launched to promote a secondary market and educate the consumer as to the need to comparison shop by calling a legitimate timeshare resale broker before buying a timeshare. John Kushman is a broker with Timeshare Specialists.  John was also interviewed by Bob Massi in a segment that aired prior to mine. John’s website lists nearly 150 timeshare resale scams, with an impressive amount of timeshare crime intelligence gathering. Organized crime rings instruct unsuspecting timeshare owners to wire money to Mexico, the Dominican Republic or Hong Kong. 

https://tarda.org/f/timeshare-specialists%E2%80%99-timeshare-exit-scam-hotline

The exit industry for primary residences is called realtors, and in cars, used car dealers. Stifling the secondary market and silencing the known exit-providing players via thousands of billable hours gives rise to boiler rooms with common-sounding names. TET produced 1,071,751 customer documents concerning an initial 2,069 Westgate accounts. 

Should anyone buy a timeshare if it can lead to financial ruin?

If developers begin to attach personal assets and garnish wages, how can it be prudent to ever buy a timeshare? If an adverse life event happens over the life of a 17.99% loan, or maybe the owner just doesn’t want it anymore, lives could be financially ruined. Clearly, the goal needs to be consumer awareness if the industry moves in this direction.      

Bankruptcy may be of no salvation. According to one attorney, since timeshares have virtually no resale value, it could be deemed an “abandoned asset” so not liquidated. After seven years of bankruptcy protection, the unfortunate timeshare owner learns that they have NOT been foreclosed and receives a bill for seven years of maintenance fees and the loan balance, with late fees. This actually happened to one timeshare owner in California.      

If a timeshare default is the only credit report black mark, and the lender is informed as to why the member defaulted, especially if experiencing unfair and deceptive practices, the lender may be sympathetic. This too has happened. 

The bottom line – If aggressive collection tactics ensue, don’t buy a timeshare unless you pay cash, but know that if a cash buyer later learns they were duped, a refund is more difficult to negotiate than a loan cancellation. Instead of media spin about there being no problems in this industry, issues should be addressed and a secondary market is necessary for the health of the industry and the consumer. 

Related articles:      

The Dashiell’s article

http://insidetimeshare.com/the-tuesday-slot-7/

Thank you Irene for this week’s article, as usual, you have covered and explained the main points for our many readers, one thing is very clear from this article, it is the timeshare owner who once again is stuck in the middle!

That is all for this week, have a great weekend and join us again next week.