For years, Hudson Homes has attempted to manage a massive, nationwide portfolio with both hands tied behind its back. Hudson Homes is a vertically-integrated service provider to owners and servicers of U.S. residential real estate. Founded in 2018, the Company is a wholly-owned subsidiary of Hudson Advisors, a globally integrated asset manager of numerous asset classes, including residential investments. In reality, Hudson Homes is a minor cog in the wheel of John Grayken’s Lone Star Funds. Grayken, a Robert Bass protégé, is well known across the globe and friend to none including his own employees. In that same spirit, Grayken has lost no sleep in hammering home a take no prisoners approach to profit. Although several years old, Fortune has a great piece out on the Grayken mentality here,
To understand the Hudson Homes fiasco, one truly must discern the optics of mismanagement at epic levels. Hudson Homes, for years, was simply the data aggregator. It was a closed system with much of its antiquated systems dependent upon closed system data. In fact, it was almost terrifying to find out that Hudson Homes relies upon its Vendors to supply the data frameworks through which Hudson Homes was only allowed to view that which its Vendors chose to share. It was literally the prisoners running the prison.
As the loose money began swirling all around, Hudson Homes began taking more of a leading role in calling the shots on asset management. The dirty little secret was that Hudson Homes had no clue on how to oversee a multi-state portfolio in a day-to-day setting. It was during this time, two key things happened: First, Hudson Homes struck an enormous deal with then Ameritrust — now ResiPro — to begin to provide services on their portfolio and second, they purchased Northsight Management, a mortgage field services industry firm. For want of better words, Hudson Homes was engaged in a Speed Dating setting. Both companies; ResiPro and Northsight, were complete 180s of each other. ResiPro was an enormous, nationwide provider of maintenance, tenant turns, rehabs, and property management. Northsight, on the other hand, proffered that they were the same, but when the rubber met the road, they were the typical mortgage field services firm. And in both cases each firm ran their own software through which Hudson Homes was granted limited access. It was the classic case of putting the cart before the horse; however, in this case there was no horse.
Footloose and fancy free. That was the environment within Hudson Homes. Stroke a check, click a button, and flip the house. Leverage was king and many gave no more thought to moving millions of dollars in a multi-billion dollar environment than they did to passing salt at the dinner table.
Early on, in the absorption of Northsight Management, it became quite clear that asset management and mortgage field services were two entirely different niches. Northsight Management’s managerial style lacked the finesse and capability to ensure that deadlines were being met, compared to ResiPro. The fact that Hudson Homes owned them meant little as Northsight was a siloed system. Field Service Technicians were in no way capable of providing immediate maintenance responses — let alone doing it for free. In fact, less than five percent of all Field Service Technicians possess the necessary licensing to provide maintenance on residential assets. ResiPro, on the other hand, was a gargantuan Tower of Babel and accustomed to the day-to-day activities necessary for asset management. The easiest way to understand the landscape is this: Northsight Management was built around padding the books and forcing chargebacks on Labor that they knew would rarely, if ever, be challenged. Northsight played in a world were kicking the can down the road was normal as the end Client had no reason to occupy the assets. They had limited experience with real world asset management. The vast majority of Northsight’s Vendors simply cleaned out debris from properties and cut the grass. ResiPro, on the other hand, knew that the key to profitability hinged on controlling the data that their Client was allowed to review. Overall, Hudson Homes was playing in the real world and their red headed step child, Northsight, was an orphan. Bringing Northsight up to speed when Hudson Homes really had no firm understanding of what they needed, was a bridge too far. Hudson’s requirements went far beyond simply cleaning up an asset to be sold as-is. Additionally, when combined with the quest for bonuses by management, the chargebacks, and the rock bottom pay, many of the Vendors at Northsight simply didn’t give a shit.
ResiPro, for years, had played with the Big Boys. And sensing that Hudson Homes was groping around in the dark, they new they had the perfect mark. ResiPro knew that they controlled the data; that they controlled the narrative; and finally, ResiPro knew that they were the only game in town. The only problem was that they needed a new name to dump off all of the negativity that was swirling around them. Ameritrust Residential, which was forced to rebrand itself as ResiPro due to horrible PR, was the workhorse of Hudson Homes. And while, early on, there was the inkling of fraud, many at Hudson Homes chocked it up as the price of doing business. To be blunt, Hudson Homes knew precisely what kind of shit show the newly minted ResiPro was rolling out; Hudson Homes knew to the dollar how bad Labor was getting fucked, as they had to approve the rebranding of ResiPro for new contracts. Here was the D&B credit rating at the time of rebrand,
I want that term to sink in — High Risk of Delinquency. Management at Hudson Homes knew this and either turned a blind eye or simply didn’t give a shit. Now, whether that was because they were getting padded envelopes each week; whether that was because they were attempting to keep a lid on things; or whether that was because the management at Hudson Homes was incompetent, I have no idea. It was clear, though, that ResiPro was in full control of the decision making process at Hudson Homes — proverbially speaking. It was Pavlovian, to say the least. For example, Hudson Homes would access ResiPro’s HoneyBadger system to submit a request. Why access ResiPro’s system and not vice versa, you might ask? Hudson Homes did not have their own system for handling the asset management side. Other than payments for services allegedly rendered, there was zero due diligence — not because Hudson Homes didn’t want it, but because ResiPro would not allow it. Much of this began in 2018.
As the rebranding got underway, the social media erupted. ResiPro, though, was in far better condition to weather the storm than the typical mortgage field service industry firm. It was an #Epic rebrand. And just like a prisoner recently released from death row, so to did ResiPro stay true to form in Bacchanalian fashion. Here is how a former ResiPro Project Manager put it in September 2020 discussing the 5 trailer salesmen,
Let me start out by saying that Resipro was once a great place to work as a project manager. That all changed for the worse in late 2017-summer 2018 when a group of 5 non construction people invaded Resipro much like when a home is overrun with pests. This group formerly worked for a company that sold portable construction trailers to large general contractors who used them as temporary offices, According to them, this was their construction experience. This is akin to a salesperson selling medical supplies to Doctors and considering themself a Doctor. This was mistake #1. Once these 5 got their foot in the door, one of them slowly made his way up to a VP level. After this happened, the other 4 people soon found themselves in Directors positions. A few of these newly appointed directors were actually fired several months before for being incompetent project managers. Then they were hired back and made Directors. This was mistake #2. This is when things really went down hill as poorly qualified and inexperienced people were hired as project managers by the Regional Manager. The Regional Manager was also part of this group of 5 trailer salesmen. He had absolutely no idea on what it takes to be a good project manager and it showed in his management style: from smothering micromanagement to hiring cashiers from Home Depot as project managers. Turnover was rampant and if you lasted more than a few months you were considered one of the more experienced ones.
The Trailermen saga of ResiPro was a sight rarely seen in the annals of the Industry. Instead of taking care of the Contractors whom created the profits or tending to the Project Managers whom kept the ship afloat, it was all hands on deck to divert maximum profits from the fire hose stream of money flowing inward. As steam began to build and money flooded ResiPro from Hudson Homes, so to did the pocketing of hundreds of thousands of dollars which eventually became tens of millions of dollars for questionable services. Sources speaking on condition of anonymity including current and former ResiPro employees spoke of massive amounts of down payments brought in with services never rendered. Additionally, more than one former ResiPro employee has said — and Hudson Homes has not denied — that photos from one asset were used to justify multiple services at other properties for services never rendered. This was substantiated by a high level source at Hudson Homes, as well. All told, Foreclosurepedia is under the impression that the tally will be above $20 Million and that number was not challenged by a Senior Hudson Homes official.
In several years worth of emails and telephone conversations with both Hudson Homes and ResiPro employees, it was evident that the status quo was not going to change. In fact, when opportunities were brought forward to change the state-of-play, they were frowned upon and only replied to with statements such as “…we have it under control.”
Multiple attempts by Hudson Homes to address both ResiPro and Northsight Management fiascoes were for naught. When it came to the tenant side, it was a disaster. In fact, Foreclosurepedia had sat in on an initial call pertaining to the Zillow portfolio which both Hudson Homes and Northsight seemed to be clueless about. Neither party seemed to be aware of the fact that requiring 24 hour inspection times for pennies on the dollar was a pipe dream. Even the numbers for tenant turns were spun out of thin air — completely unhinged from the real world. The solution which Northsight came up with was simply to throw money at the game — Hudson Home’s money. With the typical wink and a nod, Northsight threw roughly a million dollars for a new office in Independence, Ohio — just a proverbial stone’s throw away from Safeguard Properties — under the oversight of Bill Roach, former Senior Vice President at ServiceLink. Roach, a veteran of the mortgage field services industry had little to no experience in tenant occupied assets. No one seemed to care, though. Everyone’s working theory appeared to be that the very same people whom Northsight had screwed over in the Industry would come a running to get even more screwed over on the bright, shinny new side of the house. Roach, set up as Vice President of Tenant Maintenance and Turnkey Operations — a spurious title, at best — appears not to have been the lightning rod which Hudson Homes was hoping for. And in fairness to Roach, much of the problem laid at his feet was beyond his control to fix.
The bigger problem, to many, wasn’t Hudson’s inability to keep watch over the hen house, it was the questions that many were asking about whether or not complicity was afoot.
When easy money flows, the paperwork is easily buried. And buried it was. Through numerous discussions with Contractors, Foreclosurepedia was able to ascertain that millions of dollars per quarter were flowing outward. Many of the problems associated with this was that Northsight wanted to take over the appliance procurement. Assets would sit vacant for weeks — unable to close out for Contractors whom had finished the work and were being penalized by Northsight for not meeting deadlines — all because the Northsight Management Team could not get their act together. One of the most pervasive issues appeared to be that 40 percent or more of the original dollars for the asset were being scalped by both Northsight and ResiPro. This scalping process was used to pay bonuses to Project Managers. And there was what appeared to be an incentive to ensure that no contract could ever be brought in ahead of time — bonuses would be paid to Contractors — let alone on time as it appeared Project Managers would lose money.
What no one could predict, though, was the onset of COVID. And by late 2019, the inordinate levels of assets moving in and out became a challenge to manage — especially when you do not have access to the data. When COVID hit, everything spun down. Sales dried up, work cratered, offices closed, and the ability to control the narrative from the bully pulpit disappeared. What didn’t go away, though, was the real world requirement to actually pay for services owed building up to COVID. And with hundreds of project managers working from home, state unemployment subsidized with weekly federal payments began looking good. That is the deal, at the end of the day. You can only beat someone for so long before they fight back. Here is how one ResiPro Project Manager put it in an email to Foreclosurepedia,
Former employee (leaving on my own accord) of ResiPro, in shock at the methods and abuse this company has shown. They closed regions of work and essentially forced low income contractors to not get paid or settle for pennies on the dollar. It’s amazing to me that companies can operate like this legally without any real recourse from the small contractors they hire. From what I have seen my guess is they are withholding millions of dollars across the nation on back paid contracts in an attempt to settle them in markets they no longer operate “ResiPro”.
Layoffs began in earnest — especially at ResiPro. And it was becoming quite apparent that many employees within ResiPro had had their fill of the waste, fraud, and abuse not only of them, but of those they were forced to crack the whip upon. A simple perusal of Glassdoor and other headhunting websites reflect precisely the feeling employees had for the Trailermen and their ilk. For years, Hudson Homes was aware that Labor was being robbed by their darling ResiPro, but it was full steam ahead. And for years, Hudson Homes continued to turn blind eyes as the spreadsheets were padded to make the numbers look viable. With COVID, though, continuing to prime the pump with Labor whom had nothing to lose, became more and more difficult. COVID was, ironically, the Great Equalizer. And the playing field became more and more tilted in Laobr’s favor. So desperate had ResiPro become that they began deducting pay from Labor unless they met certain time-on-site requirements. Take, for example, ResiPro’s latest attempt — with the complete blessing of Hudson Homes — to misclassify employees,
A Senior Official at Hudson Homes spent nearly ten minutes explaining to Foreclosurepedia how there was no requirement for time stamps on photos all the while looking at the mass email above sent from ResiPro to their Vendors. It was Trumpian logic at its best — The Emperor Wears No Clothes. Par for the course. It had been the same rhetoric for nearly three years. So heinous had the screwing of Labor become at ResiPro, Labor began filing dozens of liens against them. LevelSet, a leading provider of Lien Services shows a myriad of liens in the tens of thousands of dollars.
And yet Hudson Homes management have continued to refuse to intervene,
Hudson Homes reaction? Deafening silence. Tote the water pails and Party Line. Crucify anyone whom might even infer that Hudson Homes management was asleep at the wheel. And it isn’t simply the issue of Labor not being paid. Here is a statement from a tenant about ResiPro’s refusal to provide maintenance — which you have to wonder if they billed for,
I moved into my apartment in Febuary. Since that time the heat hasnt worked properly . There is no heat in my kids room and none in mine. The furnace runs 24/7 and burns 275 gallons of oil in 2-3 wks set at 65 degrees. Its been 2 wks and my water issue hasnt been resolved. The doors on the coming into the apartment are not pit on correctly which allowes for bugs to come in all day and night and allows for the house to flood when it rains. Its been 2 wks for the plumbing and. Water issue and they have cancled both times they were supposed to come out. When calling today about the issues and the new roof leaking issue, I was told it wasnt an emergency. This company never calls back and never fixes problems.
With massive layoffs occurring almost daily at ResiPro, many are wondering whether or not yet another rebranding is in the offing. Who knows, maybe the Senior leadership at Hudson Homes has come to the realization of what’s $20 Million amongst friends — so long as they share it. There is a Frankensteinian irony to all this. As the Industry begins opening back up, the level of maintenance required will be gargantuan. And for the past year, those folks whom have decided that they are going to have to return to work after the Stimulus Checks and Unemployment ends have had nothing but time on their hands to read about these companies. The question that remains is will they return to them or head over to greener pastures where other firms are now even paying for bids?
If you are a former or current ResiPro or Hudson Homes employee or Contractor, Foreclosurepedia would like to speak with you for our Series.
