When the National Association of Mortgage Field Services (NAMFS) Regime Leadership sat down and determined that they were going to prevent any type of Ethics Investigations, many of the NAMFS Rank and File became nervous. When many of these people whom I consult to informed me of their discussions with Eric Miller pertaining to Complaints they had — the cumulative totals are in the millions of dollars — and the fact that Miller told them it was not his problem; that there would be no ethics investigations, a quiet change began to foment. Miller is the Executive Director of the NAMFS Regime and receives over ONE HUNDRED AND ELEVEN THOUSAND DOLLARS A YEAR CONSUMING OVER SEVENTY PERCENT OF ALL MEMBER DUES.
Since Ed Meese, the AG under Reagan, deregulated the telco industry by breaking up Ma Bell, the reality is that Industry after Industry have realized that if they do not self regulate, they most assuredly will be regulated.
The Mortgage Field Services Industry is a multi billion dollar a year Industry which has no regulation to speak of. Granted, Dodd – Frank addresses a few items which Servicers must abide by, the actual field operations are still considered to be the Wild West by seasoned veterans. By in large, payment for services — when services are actually paid for — are generally considered to be in a floating environment. What this means is that a Portfolio Holder puts a Contract up for bid. A Prime Vendor or Vendors are awarded the Contract based upon a lump sum bid — this is vital to understand the nefarious and truly dangerous state of affairs we are in today. So, Company X is awarded say the Fannie Mae Contract. Company X is known then as an Order Mill and specifically a National Order Mill. Company X then, in turn, hires Company Y to move work orders in a Regional fashion and thus Company Y is known as a Regional Order Mill. Company Z is finally hired to disperse work orders to actual laborers performing the services. Company Z is known as an Otherwise Unspecified Order Mill.
Neither Company X, Y or Z perform the totality of their services. In essence, each are large paperwork processing plants at the National Order Mill level and fold up card tables using employee’s laptops at the Otherwise Unspecified Order Mill level as we saw in the case of Carol Boyd, the Bronze Level Contributor to the NAMFS Regime whom defrauded wartime veterans on VA Contracts held by VRM. What this means is that there is generally a 20% reduction in monies at each Order Mill level and currently around 14 – 23 cents on the dollar actually translate into actual work on a property — when those monies are paid.
Certified Financial Audits (CFA) are commonplace in the real world. This is how Companies are able to verify that a Firm is financially solvent. In the Industry today, though, only Altisource is requiring them and then only after Foreclosurepedia documented the millions of dollars of fraud ongoing with NAMFS Regime Legacy Members Heather Berghorst and Adam and Amanda Buczek. In fact, Berghorst whom was the NAMFS Regime’s disgraced and former Secretary, is now facing multicount litigation pertaining to embezzlement, larceny and fraud from Contractors along with willful and malicious injury litigation from 5/3 Bankcorp in federal court. The problem in each case was that both Berghorst and Buczek engaged in a pay when paid scheme; however, even when they were paid both refused to pay Contractors. Pay when paid is generally referred to as a float and is rarely, if ever, acceptable upon federal workspaces. The reality is that whether or not the properties are Bank Owned (REO) or US Department of Housing and Urban Development (HUD) owned, the entirety of the Industry consists of a federal contracting landscape.
To date, the only segment of the Industry whom have been required to tote the note, have been Contractors — and I use that term very loosely. Time and again, Order Mills have passed the buck of not only paying for all materials, labor, transportation and insurance onto Contractors, but then they have sought out new and devious ways of not paying the Contractors for their Services. Order Mills actually require Contractors to insure them!
From time-to-time, we witness Order Mills stripping Contractor’s bones all the way down to the marrow. Recently, GTJ Consulting LLC whom is a Fannie Mae Contract Holder, was found to be allowing Industry Contractors to perform all of the shit work; create all the paperwork necessary for documentation, and then sending its own employees out to capitalize upon the lucrative bids. Many will remember GTJ in that they exposed countless Contractors and Clients to potentially financial ruin when they would not even spend a few dollars to secure their web servers and as opposed to obeying legally binding Contracts, were recalcitrant to pay for services rendered by Contractors. GTJs Party Line was that Fannie Mae had not paid them so fuck Contractors. The reality is that GTJ did not have the money to pay Contractors, in full. In essence, GTJ and many other Order Mills are, by definition, financially insolvent when it comes to having to pay in a margin call scenario. Here, let me walk you through what I mean in the way that only a trained media professional such as myself is capable of doing,
If an Order Mill has at least a few thousand work orders in their Firm, generally and depending upon the Client they service, most of them are paying far ahead of the Contractual Timeline Order Mills have agreed to pay their Contractors. This creates the appearance of liquidity and thus allows the Order Mill to both invest (short term) the money either as investments (generally real estate flips) or as short term loans — perhaps another NAMFS Regime Order Mill needs a few quid to weather the storm or perhaps the Order Mill’s owner needs to put a kid through school like the Berghorst’s did.
The problem with this type of accounting system — and generally it is run on Quickbooks and that is NO SHIT — is that it’s an inherently speculative technique that allows people who want to get really aggressive to buy more items than they could otherwise afford. More on point, though, it rapidly becomes a Ponzi Scheme in that Labor is representative of cash investment and thus the Labor is, many times, not paid for.
Remember earlier when I told you that the Prime Vendors negotiate a flat fee contract with the Portfolio Holder? Yes, that means whether it is a financial institution, hedge fund, non traditional financial institution, government sponsored entity (GSE) — Fannie Mae, Freddie Mac, etc. — or the US Government itself — HUD, US Department of Agriculture (USDA), US Department of Veterans Affairs (VA), US Marshals, or otherwise — the newly defined term back billing – charge back is a non sequitur in that the Prime Vendor has already been paid. While I am leaving this area for an Article unto itself, suffice it to say that much of this scheme goes back well over 12 months. The reality is that the guarantee on a new home is only a year and a day! Moreover, the back billing – charge backs are not deducted from the properties wherein the allegations are leveled. In fact, Order Mills arbitrarily and capriciously deduct these funds from other properties wherein there were no issues. So, on the one hand, Order Mills ordain that each and every Work Order is a Contract unto itself and yet their accounting is conducted in a pot luck fashion. Want to talk about liability?! Hell, even a first year law student could draft the Writ on this.
So, now that we know virtually every Order Mill engages in a pay when paid scheme and then floats that weeks if not months down the road after being paid; now that we know for a fact that Order Mills such as HomeStar Property Solutions (HomeStar) and Safeguard Properties (SGP) have implemented legal positions which appear calculated to bankrupt out those whom sue to get paid, the reality is that now more than ever the Industry needs regulation. In fact, the financial state of affairs today pose a clear and present danger to the real estate market in the United States. If we had a margin call wherein Order Mills were required to pay all of their outstanding Work Orders tomorrow morning, I can think of only one firm, Assurant Field Asset Services (AFAS), whom has the liquidity to do such and then only if they tap their umbrella insurance juggernaut Assurant. What this means is that the potential for liens and the liens have begun already is off the charts. While Order Mills like SGP have embedded tidy phrases like arbitration — no information on whom runs it or how to do it — into their Contracts and AFAS has forced Contractors to waive their rights to jury trial, the truth is that the Mortgage Field Services Industry needs Union Intervention. While I have helped create the International Association of Field Service Technicians (IAFST), the Industry needs the administrative, financial and legislative power of a Union. Personally, I am a Teamsters Man. Remember that statement.
Ever since Hurst v Buczek which was a federal lawsuit filed by a Brad Hurst, a Contractor in California back in 2010 against Buczek Enterprises — yes, the very same Buczek Enterprises which defrauded Contractors from New York to California while Altisource paid them — the legal reality is that there are not Contractors in this Industry. The Honorable Judge Chin, speaking from the Bench in the US District Court for the Northern District of California, was succinct,
The determination of whether the status of an employee or that of an independent contractor exists is governed primarily by the right of control which rests in the employer, rather than by his actual exercise of control; and where no express agreement is shown as to the right of the claimed employer to control the mode and manner of doing the work, the existence or nonexistence of the right must be determined by reasonable inferences drawn from the circumstances shown, and is a question for the jury.
We have not had a W9 environment within the Industry for nearly a decade now. The problem is that this dirty little secret is now well known both within the Beltway where there is a huge need to tap funds to finance an unfunded mandate known as Obamacare, and also by the Unions.
With all the usual suspects over on the Drive By Social Media harping in Facebook about how Organizing is bad news, the reality is that these very same people have the most to lose from Labor getting their act together. Why? Their Order Mill pals will inevitably be in a world of shit — truth be known, they already are. And this is where we are today with respect to the fact that a handful of NAMFS Regime Offener Members were hellbent upon ensuring that regulation would come. At the end of the day, there is no one else to thank but Eric Miller.
I have a very long memory. As I tell my subordinates, the worst thing you can do is slight someone whom is in power. The reason is that a real grievance may be handled; a slight is perceived and thus cannot ever be addressed. The reality is that if my videos put people to sleep in the Facebook Groups — yes, I keep tabs in all of them including Agnew and Savage — I am accomplishing that which I have set out to do. Union status will be here around 3Q FY2015 and there is nothing that will stop it. Then and only then will I begin to take a break for a change.
In closing, we find that the Industry is not dissimilar from Wal Mart in that many Contractors are on welfare of some kind. More on point, though, it has become increasingly apparent that the ability to float the note is receiving a cold shoulder as McDonalds is hiring and actually paying better than most of the Order Mills. Over the next week, I will finish up my interviews with State and Federal Officials and issue the first of its kind White Paper pertaining to Industry Subsidization. Foreclosurepedia has rarely delved into pricing as I have always felt that a free market economy dictates such. When that pricing, though, is shored up vis-a-vis state and federal welfare benefits, it is time to enter the fray. By late next week, virtually all Price Lists will be published on IAFST and a cost analysis breakdown IN RE: Service Contract Act (SCA) will be admitted, as well. With a Republican Congress; both House and Senate, I believe IAFST will begin to make headway in its lobbying efforts we are already engaged in. I also believe that the 39 NAMFS Rank and File and 17 Non NAMFS Members I have consulted to, thus far, will double with respect to conversions into a W2 setting — don’t say I didn’t tell you so!
