As destruction is spreading from the West Coast through the Midwest and sets its eyes upon the Southeast, the reality is that there are tens of thousands of inspections available; however, by the time an inspection gets to the boots on the ground, pricing is generally even worse. In fact, even here at Foreclosurepedia GHQ, we have been hit with back-to-back storms that have caused some fairly extensive damage. It begged the question pertaining to how much of a gap is there between disaster inspections pricing and the real world. In the case of the folks whom performed mine, here, it was mind boggling! First, though, we need to define what a disaster inspection is as our Industry likes to throw them around to simply undercut the already gutter pricing.
FEMA generally assess the damage to determine eligibility for federal assistance programs. Their inspections generally focus on overall needs, not specific policy details. FEMA inspectors are usually government employees with standard salaries, not paid per inspection.
Insurance companies generally evaluate the damage to determine coverage under the policy and payout amount. The inspections are highly detailed, focusing on damage covered by the policy and potential exclusions. Insurance companies use licensed adjusters who are often independent contractors. Pay can vary depending on experience, location, and complexity of the claim, but typically falls in the range of $50 – $150 per hour.
Public adjusters generally represent policyholders to ensure they receive a fair settlement from their insurance company. Inspections are similar to insurance adjusters, but with a focus on advocating for the policyholder. Public adjusters typically work on a contingency basis, meaning they receive a percentage — usually 10-30% — of the final settlement they help the policyholder obtain.
With that said, oft times our Industry takes their orders from their Clients on High. What I mean is that when a portfolio changes hands, Industry stakeholders need to put a proverbial set of eyes on assets to get a feel for their condition. Short of the HUD M&M FSM contract, there are no other opportunities to correct malfeasance with respect to asset management. Financial institutions, government sponsored enterprises, and investors are always looking for ways to offset their costs. Disaster inspections, in conjunction with bankruptcy inspections, are easy ways to offload the billing to the US government, itself.
Some 11.9 percent of homeowners in the Sunshine State who told Redfin that they plan to move in the next year said they were doing so because of climbing insurance costs, roughly twice the number of U.S. homeowners who, on the national level, are planning the same (6.2 percent). — Newsweek, 24 April 2024
Sticking with the theme of disaster inspections, this year is predicated to be the worst year ever when it comes to hurricanes. And insurance companies have publicly made their exits. Take Florida, for example. Florida’s vulnerability to hurricanes and other extreme weather events has led to more frequent and expensive claims. Reinsurance helps insurance companies spread risk, but with rising disaster costs, reinsurance has become much more expensive. And Florida has a reputation for being lawsuit-happy, and a high number of fraudulent lawsuits against insurers drives up costs for everyone. So, how does that translate into eventually not getting paid? The shrinking market makes it harder for homeowners to find affordable coverage, threatening the stability of the housing market. Rising premiums put a strain on household budgets, impacting quality of life for many Floridians. And without proper insurance, securing a mortgage can become difficult or impossible.
Finally, the resurfacing of targeted debt collection activities by firms such as Altisource, under the guise of inspections, has once again raised its ugly head. When you review documents that state something to the effect that, This is an attempt to collect a debt you already know that you are performing an illegal service unless you are a licensed debt collector. And with inflation raging out of control, the costs of legitimate services at all time highs, remember if a company can save money by sending you out to do an illegal activity, they will. Moreover, though, that Master Services Agreement (MSA) you signed, when onboarding, generally states that any actions you take are taken with the expressed understanding that you are legal to perform them.