National Association of Mortgage Field Services (NAMFS) members recently began deploying a weaponized version of Vacancy Inspections in the Mortgage Field Services Industry destined to reignite employee misclassification litigation as well as the potential for Capital Hill investigations. Several years ago, a typical Vacancy Inspection consisted of a handful of photos and the ticking of some common sense questions — car present, lawn overgrown, garbage on the porch. Today, though, while the photos are rapidly approaching 100 and the questions now take more time to answer than the inspection itself, the reality is that for the THREE DOLLARS paid by some NAMFS members, Labor has dried up and it has become increasingly difficult to find new Inspectors.
To understand the latest round of insanity percolating out, one first needs to know that Inspectors are independent contractors. What that means is that Management — Clients hiring Inspectors — are not legally allowed to tell Inspectors how to perform their duties. So, let’s lay this out in the way that only a trained media professional such as myself is capable of doing.
Jane is hired as an independent contractor by John to verify the occupancy status of a property — either is IS occupied or it IS NOT occupied. This, by in large, is a pretty simple task provided that the Client provides a few pieces of information such as whom is the homeowner. Thus far, firms like Shellpoint seem incapable of doing that. Moreover, though, there has been a recent growing trend of requiring photos taken — even when the property is obviously occupied — to knock on the door which, even in the best of times, is a dangerous situation. That is not a requirement by FHA, USDA, or the VA — it is simply yet another demand by NAMFS members for the $3 inspections.
To emphasize precisely how dangerous it has become to knock on doors as the pandemic moratoriums end, here is what the Washington Post had to say today in an article entitled The Return of the 10 Minute Eviction, about a recent encounter,
“So, I walk into this apartment the other day, and the guy’s loading an AK-47,” one constable said. “I couldn’t understand half of what he was saying. Just gibberish.”
For years, there has been an extremely fine line between operating an independent contractor and misclassifying an employee. And for years, NAMFS members have paid out millions of dollars in settlements to make the claims go away. The bigger problem, though, has become how many photos of the car, dogs, cut grass, and kids on the porch does the Industry require to document occupancy. Well, if you ask Shellpoint, it appears that they want a family photo album. And these photos — in almost every jurisdiction of the US — border on both trespassing as well as being a peeping tom especially when Inspectors are ordered to go up to the door and take a photo of their hand on the door knocking knowing the property is occupied!
Risk aversion is beaten into the heads of Labor with each and every work order issued by NAMFS members. Starting with the Master Services Agreement (MSA) Labor signs, NAMFS members ensure that Labor understands that no matter what happens, Labor is responsible for it.
Shellpoint’s bigger problem is that there is ZERO guidance on what happens when the Inspector makes contact with an occupant. For example, as no homeowner name is provided, Inspectors are potentially releasing confidential information to a party not entitled to receive it such as a renter, spouse not on the mortgage, etc. Additionally, Shellpoint appears to have no problems with collecting the names and telephone numbers of minors nor telling them that the mortgage is in default. From a psychological point-of-view, the trauma this instills potentially destroys lives. Whether or not Shellpoint intends this, I do not know. What I do know is that Shellpoint appears to have no incentive to run a high touch on how their inspections are being conducted which will ultimately lead to massive Consumer Financial Protection Bureau (CFPB) complaints going into the New Year.
With the latest COVID variant omnicron rampaging throughout the US as armies of Inspectors continue to know on doors demanding information through the holidays, the reality is non masked, non tested, non vaccinated people are going to bump up against increasingly hostile homeowners. A few simple steps like adding the homeowner’s name, requirement to, at minimum, wear a mask, and a proper script with guidance on whom information is to be released could greatly improve Shellpoint’s chances of making contact all the while protecting Labor from violent assault.
The reality, though, is that Shellpoint is owned by New Residential Investment Corp. New Residential has taken a keen interest in the Mortgage Field Services Industry lately by snapping up Caliber Home Loans, Avenue 365 Title Insurance Agency, eStreet Appraisal Management, Covius, and Matic a property insurance firm. And as many remember Foreclosurepedia reporting upon, anyone whom touches their mortgage servicing rights, they must funnel the property preservation back to a New Residential firm. We saw this brought to a head when Ocwen was ordered to move their preservation work away from Altisource and to a New Residential provider. The power of too big to fail and the need for firms to transparently release the role foreign national ownership plays has been the bedrock of financial disclosure for decades. In the case of New Residential, the fact remains that it is under the ultimate control of Softbank out of Japan. Foreclosurepedia covered this in depth, months ago. This is an extremely dangerous situation when Labor may have to ultimately wage international litigation in order to be paid. The notorious Japanese investment firm that owns Fortress (and indirectly controls NRZ as the external manager of the REIT) has been involved in a number of dubious investment schemes, including Wirecard and WeWork, to name the short list.
If you think that it is business as usual and the US government has no fears with respect to the ownership all the way down the pike, take a read of how R Christopher Whalen puts it,
The Softbank purchase of Fortress never made sense to us. Of note, Bloomberg News reports that the Committee for Foreign Investment in the US (CFIUS) placed limits on Softbank’s corporate control of Fortress. Bloomberg reported:
“To win approval from the Committee on Foreign Investment in the U.S., SoftBank agreed to cede any control of day-to-day operations of Fortress. Since the transaction closed in December 2017, Fortress has been run independently.”
We think it speaks volumes as to the perception of Softbank by the US government that CFIUS would put such extraordinary limits on CEO Masayoshi Son’s control of a financial firm. CFIUS limits on direct foreign investments in the US usually are driven by national security concerns. Fortress founder Wes Eden is a leader in the world of finance, of course, but the CFIUS restriction on Softbank’s investment in Fortress is remarkable nonetheless. SoftBank shares have tumbled about 21% this year in Tokyo trading, compared with the 8% gain by the Nikkei 225 Index, Bloomberg reports.
The grass is rarely greener on the other side and ever more so when conglomerates like the aforementioned push quantity over quality as is the case when we discuss how the inspections are rolling out here in the US. The biggest question on everyone’s mind today is how much of that data — the FHA, USDA, VA loan info — is being floated up for investment purchases by foreign nationals? I mean why else refuse to provide the name of the homeowner in the inspection?! Is it a case of Bird Dogging 101? I don’t know, but in the Industry does anyone ever?
