When Foreclosurepedia wrote a recent piece about the lack of pay increases in the Mortgage Field Services Industry, it was picked up by the LinkedIn News Editor’s feed and eclipsed over 10,000+ views in less than an hour — and that number is still skyrocketing. It wasn’t that my post was pithy as much as it was condemning of National Association of Mortgage Field Services (NAMFS) members whom have refused to increase wages for nearly 30 years. Eric Miller is the Executive Director of NAMFS, a non profit business league whom oversees many of the $3 inspections — that is not a typo — his members farm out which determine if a family is allowed to remain in their mortgaged home or are cast into the street during a pandemic. As Miller has continued to receive inordinate pay raises placing his annual salary at over $138,000 per year according to the latest NAMFS tax returns and as NAMFS members are continuing to reap record profits based on limited volume, the reality is that when defaults begin flowing in next year, there may be no Labor to service them.
The US Department of Housing and Urban Development (HUD) vis-à-vis FHA and a multitude of GSE’s has begun to take a keen interest in precisely how practical their Mortgagee Letter (ML) pricing is and how much of it actually passes through to Labor whom perform the services at the field level. Initially, Eric Miller and NAMFS requested $120,000 in order to lobby HUD for ML price increases; however, they have only been able to solicit $29,850 to date as $10K was NAMFS seed money — and that number has NOT increased in the past four weeks. Many have scratched their heads attempting to figure out how paying Miller $120,000 would help getting a pay raise and then would NAMFS members ever ensure that the boots on the ground Labor ever see a single penny of that increase?
MFS Supply, the largest supplier of materials to the Industry such as locks, dehumidifiers, and appliances, announced — using the term substantial increase — Monday that their pricing is going up immediately and all discounting including Partner programs are to be cancelled. This is coming on the heels of the Sherwin Williams 4% increase surcharge on corporate accounts with an across-the-board price increase on paints, stains, and coatings come February, 2022. Combine this with an average of multiple weeks out on appliances — even when factory direct — and months out on windows, hundreds of percent increases in lumber, and NAMFS members refusing to pay for weeks, it is a perfect storm in the Industry.
The Industry average of fifty cents per square foot for roof tarping, sheetrock and insulation removal, $30 grass cuts no matter the height or square footage, and the elephant in the room of $3 inspections with Safeguard Properties now requiring drone video footage simply goes to show how far out of touch HUD Secretary Marcia Fudge has become with respect to reality.
In no other Industry, overseen by multiple US government agencies, have the roosters come home to roost like the Mortgage Field Services Industry. For nearly thirty years, pricing in the Industry has been frozen while gargantuan profits have been reaped on the bidding side by NAMFS members. Adding salt to the wounds, inflation has stripped away what little margins there were — circa 1989! Moreover, though, as the COVID omnicron variant has hit center stage with an infection rate four times that of the delta variant, Labor has grown weary of being the tip of NAMFS’ spear with zero protection or pay hikes normally associated with hazardous conditions. It is simply the way NAMFS members do business — Labor is disposable.
Here are some numbers to remember: $3 inspections, $18 a cubic yard debris removal, 50 cents per square foot for roof tarping and sheetrock removal. And here is what it costs to do that: $750 truck payment, $250 for truck insurance, $300 in gas per week, $450 in General Liability and Errors & Omissions, $300 for Workman’s Comp, $125 for Property Preservation Wizard, $125 for Smartphone, $2,000 for dump fees, and $5,000 for assorted materials necessary for Initial Services.
The pipe dreams about Labor ever seeing a pay raise conditioned upon NAMFS members receiving Mortgagee Letter price hikes is a fallacy. This is like allowing a bank robber to become a bank teller. NAMFS members have no reason to pass through ML increases and further, the reality is that with two and three middlemen in between the Prime Vendor and Labor, the reality is it would be impossible. Amazon is paying $24 an hour, a $3,000 sign on bonus, and full benefits immediately including money for college. Wendy’s is starting at $17, no overhead, paid weekly, and free meals. Wal Mart is starting at $16.40 an hour with discounts on products, insurance, and college tuition. And overall, the average minimum wage across the US is now starting at $15 per hour. None of these jobs require a vehicle, tools, insurance, materials — ZERO overhead!
Out of every NAMFS member we spoke with, there were only a couple of companies whom, while not increasing pay, were at least attempting to get pay in the hands of Labor more quickly. ServiceLink, a Prime Vendor, deserves some credit as they are getting pay into the hands of Labor in 5 business days. Ditto for Stiles General Contracting, a regional outfit based in El Paso, Texas. And Guardian Asset Management has plans to accelerate pay timelines according to senior level personnel we spoke with.
The question that presents is whether it is too little too late. And while the conversation is revolving around the minuscule volume out there, according to CNBC, defaults are now starting to increase. Wells Fargo is seeing borrower defaults start to rise from lows reached during the pandemic as financial conditions begin to normalize, CEO Charles Scharf said Tuesday. To that point, the foreclosure moratorium under Regulation X of Dodd – Frank, is set to expire on 31 December 2021. We have no doubt that on the first business day of the New Year, 03 January 2022, the inspections will begin to roll out followed by the Initial Services. It boggles the mind that NAMFS members, with a straight face, say that there will be plenty of Labor as the volumes creep up.
The final nail in the coffin of this Industry is now being recognized. The unconstitutional model of employee misclassification is now being litigated across the US. Most recently, in the conservative federal district of Georgia, hundreds of thousands of dollars were paid out in the Elinknan v RP Field Services and NCCI to settle FLSA claims. And over the past several years, millions of dollars have been paid out to settle claims that both Inspectors and Field Service Technicians are actually misclassified employees. Two things are certain as we go forward in the New Year, no amount of signatures waiving the rights as employees will protect NAMFS members and in the same way, no amount of volume of $3 inspections will ever equate to profit. Regardless of whether or not HUD will ever enforce the Service Contract Act in order to protect Labor, the reality is that it may come to nationalization of the Industry if Labor continues to walk out.
