It happens all the time. A firm supplying a product to a given industry envisions removing all the competition and controlling the space. Whether it is the most famous example in the Standard Oil case as applied under the Sherman Act of 1890 or how in 1999 a coalition of 19 states and the federal Justice Department sued Microsoft. They all have a large history primarily controlled by the Interstate Commerce Act of 1887 which began a shift towards federal rather than state regulation of big business. It was followed by the Sherman Antitrust Act of 1890, the Clayton Antitrust Act and the Federal Trade Commission Act of 1914, the Robinson-Patman Act of 1936, and the Celler-Kefauver Act of 1950. Oft time, though, the Federal Trade Commission (FTC) steps in when a large scale Merger and Acquisition (M&A) is proposed as happened in the failed Comcast – Time Warner Cable merger. The merger of Comcast and Time Warner Cable was widely opposed due to concerns over its impact on the overall market. It was argued that the sheer size of the combined company would reduce competition, would give Comcast an unprecedented level of control over the United States’ internet and television industries.
The problem with M&A’s in the Mortgage Field Services Industry is that, first, it is completely unregulated. This is an Industry which moves hundreds of billions of dollars, involves many Domestic Systemically Important Banks (D-SIB) as well as Systemically Important Financial Institution (SIFI) based in the United States, and has absolutely no oversight by anyone. In fact, other than pricing which used to be controlled by the Department of Housing and Urban Development‘s (HUD) Mortgagee Letter (ML) — I say used to be because it only establishes pricing for FHA insured properties which has not increased in 30+ years — there is no uniform ability for even the US government to intercede EVER! This problem was originally exposed by Foreclosurepedia in early 2014 and later through the Involuntary Bankruptcy of National Management & Preservation Services, LLC, d/b/a National Field Network (NFN).
NFN, as it turned out, was a Regional Order Mill — much like a puppy or pill mill — that obtained work from all manner of US government entities such as Reverse Mortgage Solutions (RMS), a Home Equity Conversion Mortgage (HECM) Awardee via HUD. In fact, only HECM loans — reverse mortgages — are insured by HUD in this space. They also performed services for other Regional and National Order Mills throughout the Industry and all generally members of the National Association of Mortgage Field Services (NAMFS). This tidbit is important to remember. To that point, NAMFS members sent work from Fannie Mae and Freddie Mac, both of which are government sponsored entities (GSE) and were and still are under conservatorship of the US government. In addition, NFN serviced millions upon millions of dollars upon FHA insured mortgages. At no time, whatsoever, did NFN pay a penny of income tax, although its owner Jack Jaffa is alleged to have paid taxes on his own personal returns. Dun and Bradstreet, a respected credit reporting agency for corporations, estimated the annual income of NFN, in 2017, the last year they were a Dun & Bradstreet Verified Member, at $16,075,755.00.
So, an unregulated firm in the Industry, whom was performing Sixteen Million Dollars a Year and servicing US government assets becomes entangled in a web of waste, fraud, and abuse. Only problem was that no one was monitoring. More telling, though, is that when those entities and US government agencies are forced to pay back millions of dollars in an Involuntary Bankruptcy, which has now spanned over five years — and could have been prevented years before had there been regulation — and powerful people began to take note. Problem was that those powerful people were the wrong type of people!
Verisk Analytics, Inc. is an American multinational data analytics and risk assessment firm based in Jersey City, New Jersey, with customers in insurance, natural resources, financial services, government, and risk management sectors and valuated in the billions of dollars as a publicly traded company. Some of its subsidiaries include: AIR Worldwide, Insurance Services Office, Maplecroft, and Xactware. Xactware, whom many in our Industry are familiar with, is a suite of software products that allow for the submission of bids throughout the disaster and real estate channels.
On 29 August 2019, Verisk announced the purchase of Property Preservation Wizard (PPW) which, at the time, was reported to have more than 90 percent of the property preservation work order business. In fact, its only competition was Pruvan, which had been struggling since its entry into the space to become accepted. Here is how Mike Fulton, President of Xactware, put the purchase,
“Xactware and PPW have a long-standing history of successful collaboration, and we’re proud to build on that relationship,” said Xactware’s president, Mike Fulton. “PPW adds robust service and order management capabilities to our solutions that can help our clients realize tremendous savings in time and operating costs.”
While initially the Press Release was rather innocuous, the problem is that the US government, once again, did not have its eye on the ball. Within months, the $125 a month minimum fee was increased to the current $149 a month. Listen, though, to how Fulton drives home the point of complete control of the space,
Xactware’s property preservation estimating application, XactPRM®, currently integrates with PPW’s work order management solution. The integration between XactPRM and PPW empowers contractors, banks, inspectors, and field service providers to automate and manage work orders more efficiently and estimate preservation costs more rapidly.
So, Verisk now not only has the command and control over virtually all work orders which are processed to and from D-SIB and SIFI banks and providers, GSE’s such as Fannie Mae, Freddie Mac, and also US government agencies such as HUD, the United States Department of Agriculture (USDA), and the Department of Veterans Affairs (VA). And it gets even better!
Not missing a beat, Verisk jumped back in the game again on 18 May 2022, after the Industry had completely cratered, to land a bottom dollar price on Pruvan. As you remember at the beginning of the story, Pruvan held a very minimal piece of the property preservation work order traffic. The reality, though, which is not secret on the Street, is that the purchase of Pruvan gave Verisk two things: 1) As PPW’s mobile technology was not much better than two tin cans connected by a string, Pruvan’s mobile app was light years ahead; and more importantly, 2) The purchase of Pruvan gave Verisk ONE HUNDRED PERCENT control of all property preservation work orders in the United States and its Territories.
The above reference to property preservation work orders does not include inspections. But that channel is locked down by only two providers: InspectorADE, owned by Scott Nerdin, and Yan Zang, whom owns EZInspections. We will build out on them in an article later this week including the foreign national influence.
In full disclosure, I have personally used both PPW and Pruvan. And if PPW was the Taj Mahal of the Industry, Pruvan was the lonely homeless shelter outside of Muscle Shoals, Alabama, whom couldn’t keep the Jesus Saves lights on anymore. In fairness, PPW is nothing more glamorous than an Excel spreadsheet built on the backbone of open source code — PHP. No two ways about it. Now, whether or not Verisk – PPW are properly pushing back the code of core modifications, under the PHP licensing agreement, is anyone’s guess, but is worthy of exploration.
The stranglehold that Verisk has put together should make any Senior Department of Justice official investigating Verisk, a publicly traded company, blush! I mean it reads like a Mafia blood oath of omertà! Here, let’s start by talking about what they are allowed to do with your data, who owns it, and who keeps it when you leave. This comes from the Verisk – PPW Terms of Omertà — sorry, I meant Terms of Service (ToS),
Xactware shall own all assignment, estimate, inspection, job and/or project data from the Services, from which the assignee, assignor, and non-public client-specific information has been removed, which were created and/or extracted using the Services.
Customer grants to Xactware, and respective service providers a perpetual, non-exclusive, royalty-free, sub-licensable, and transferable right to use, display, copy, modify, disclose and create derivative works of such User Generated Content.
Now, if you want to export that kind of data, here is what Verisk – PPW has to say about your rights,
During the term of this Agreement, Customer may extract some of the data using the export and reporting features within the Service. Upon request and at Customer’s expense, where technologically feasible, Xactware will send Customer the requested data in a readily accessible format.
To the point of concern anyone has about keeping sensitive Publicly Identifiable Information (PII) or US government data secure, here is what Verisk – PPW has to say in their ToS,
Xactware DISCLAIMS ALL WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS FOR A PARTICULAR PURPOSE. THE SERVICE MAY BE INTERRUPTED OR CONTAIN AN ERROR. WHILE XACTWARE TAKES REASONABLE PHYSICAL, TECHNICAL AND ADMINISTRATIVE MEASURES TO SECURE THE SERVICE, XACTWARE DOES NOT GUARANTY THAT THE SERVICE CANNOT BE COMPROMISED. — Bold and color added by Editor
Gets better though with Verisk at the helm. Curious what kind of damages they are responsible for should they jack up the code, lose your work or photos, or allow Russia to backdoor the software? Glad you asked. Here is what Verisk – PPW says in their ToS,
a). IN NO EVENT SHALL XACTWARE BE LIABLE FOR LOSS OF PROFIT, GOODWILL, OR ANY OTHER GENERAL, SPECIAL, CONSEQUENTIAL, INDIRECT, CIRCUMSTANTIAL, OR INCIDENTAL DAMAGES SUFFERED OR CLAIMED BY YOU OR ANY OTHER PERSON, FIRM, OR ENTITY AS A RESULT OF YOUR USE OF THE LICENSED PRODUCT, DOCUMENTATION, DATA, SERVICES, OR OTHER ITEMS PROVIDED HEREUNDER, IRRESPECTIVE OF WHETHER SUCH LOSS OF PROFIT, GOODWILL, OR OTHER DAMAGES OF ANY NATURE WAS KNOWN OR COULD HAVE BEEN REASONABLY FORESEEN BY XACTWARE.
b). LIMITATION OF LIABILITY. XACTWARE’S LIABILITY FOR DIRECT DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT (WHETHER IN CONTRACT, TORT OR OTHERWISE) DOES NOT EXCEED THE GREATER OF THE AMOUNT PAID BY CUSTOMER WITHIN THE PRECEDING MONTH UNDER THIS AGREEMENT OR $100. — Bold and Color added by Editor.
INDEMNITY. Customer indemnifies Xactware and hold Xactware harmless for all damages, losses and costs (including, but not limited to, reasonable attorneys’ fees and costs) related to all third party claims, charges, and investigations, caused by (i) Customer’s failure to comply with this Agreement, including, without limitation, submission of Customer Data that is misleading or false, or violates third party rights or applicable laws, (ii) any Customer Data submitted to the Services, and (iii) any activity in which Customer engages in through the Service. For the avoidance of doubt, upon demand Customer must pay or reimburse Xactware for any costs or expenses incurred or suffered by Xactware in responding to any legal process (such as a subpoena or other court order) requests regarding Customer Data.
The PPW Frequently Asked Questions (FAQ) page adds even more fuel to the fire as you examine the litany of anti Labor and copyright violations scattered throughout the page. First, unless you specifically grant copyright of your photos to another, it remains the sole copyright of the photo taker. Safeguard Properties (SGP) attempted to do this, years ago, and it miserably failed. The US government is quite clear on this where the below is quoted from the Copyright.gov website,
[C]opyright protection exists from the moment an original work is “fixed” in a tangible medium. For photographers, for example, fixation occurs when you take a picture. You don’t need to do anything else at all for your work to be protected by copyright.
For years, photographs submitted by Labor have mysteriously appeared all over the place such as on Trulia, Zillow, PropStream, virtually each and every Realtor’s MLS in the United States, as well as in brochures utilized in a for profit setting by a multitude of US government agencies including HUD. HUD publishes them on their HUD Home Store, the auction arm of HUD. Here is a newsflash, NAMFS members are paid for the photos, that is a fact as it is in HUD’s Mortgagee Letter. Now, whether PPW, in its previous state sold them, whether Verisk – PPW sold them under the “Anonymous data” provision, or whether National Association of Mortgage Field Services (NAMFS) members themselves repackaged and sold them, the elephant in the room is the copyright violation. There is one thing I can guarantee, those photos were not given, free of charge, to the aforementioned — and other — places where the photos appeared!
It is not simply that Verisk, a publicly traded company, has taken over 100 percent of the property preservation software in our Industry — which would trigger an antitrust investigation, at minimum, in any other industry — it is also that it has occurred under the watchful eye of the US government. Now, while Verisk parades the sale of PPW around as the wet dream of Whelan, the reality is that the current NAMFS President, Matt Zoldowski, was the co-owner of PPW according to a NAMFS Press Release streamed on PR Web and released on Insurance Newsnet on 09 October 2013. Here is what NAMFS had to say,
Matt Zoldowski is co-owner of Property Pres Wizard. Matt started in the field services industry covering Ohio and Michigan. He and his partners developed PPW to meet the needs of their growing business. As PPW grew, they had to make a decision. In January of 2011, they closed their contracting business so they could devote all their time and energy to PPW. Matt uses his knowledge gained from his own experiences, and the experiences of others, to help his clients run better, more profitable companies.
Zoldowski’s sale of PPW came with some specific perks, though. Zoldowski was retained by Verisk as an Account Executive. I want that to deeply sink in, for just a moment. Zoldowski sells PPW to Verisk. Verisk makes him an Account Executive at Verisk. Verisk then buys Pruvan which removes all competition from the market. All pricing increases across the board. And then, wait for it, Zoldowski becomes the President of NAMFS. This is important, not just because of the below, but because of what happens after that.
It should come as no surprise to the Foreclosurepedia Nation that the National Association of Mortgage Field Services (NAMFS) is back to their re-write of By Laws in order to suit their needs. Matt Zoldowski, the former owner-employee of Property Preservation Wizard (PPW), was elected as NAMFS President at the recent NAMFS #FraudFest 2019 in Ft Worth. The only problem appears to be that Zoldowski is ineligible for his latest ascension. NAMFS By Laws are pretty specific in whom may hold office. In the matter of Zoldowski, his public LinkedIn profile states that he no longer works at PPW. Not a surprise as Steve Whelan announced that PPW recently sold to Xactware. To that point, though, the sale culminated PRIOR to Zoldowski’s election. And as predicted, much of the predictions Foreclosurepedia made — just like in the prescient 2014 predictions of the Involuntary Bankruptcy of NFN — came to fruition.
Coming on the heels of Zoldowski’s appointment as NAMFS President, two things happened: First, NAMFS began to refuse presenting their IRS 990 nonprofit tax return which is required, by federal law, as they are an IRS 501(c)(6). For the previous handful of years, they presented it, when requested, but not since the appointment of Verisk Account Executive Matt Zoldowski, whom is now the NAMFS President. Second, in the most recent NAMFS Conference to be held on 23 May 2023, for all intents and purposes, they have removed the Keynote Speaker whom has appeared at each and every NAMFS conference over at least the past fifteen years. This is critically important, because virtually ALL of the time is dedicated to Verisk for the only full day of the conference as Foreclosurepedia discussed, at length, in our article last week! Virtually all sponsored sessions on the 23rd — hell, all that we can find as we documented — are paid for by Verisk!
A Senior HUD official, speaking on condition of anonymity, had this, in part, to say when asked whether or not the controlling of the property preservation work order space by Verisk, was an anti-trust issue,
Either way, it does certainly raise certain security concerns. I know that it’s at least on HUD’s radar, as it came up in an internal meeting I was in a couple weeks back where concerns were raised.
On the one hand, I commend HUD for paying the issue lip service and on the other, it is deeply concerning that a redneck, living in a county with one stoplight like myself, is capable of connecting the dots. For far too long, the ability of the folks at HUD’s SF Housing and the Management and Marketing (M&M) division have been capable of living two lives. One life presents this imaginary Chinese Wall that cannot be crossed between FHA and HUD. It is a wall behind which on FHA insured properties, financial institutions are capable of back billing Labor for hundreds of millions of dollars each year, violate federal law with respect to the Service Contract Act, Davis – Bacon, and employee misclassification. Forelcosurepedia is replete with thousands of examples in our over 2,300+ articles to date! In fact, when financial institutions illegally seize money from Labor, by and through NAMFS members, there is no meaningful appeals process, no legal right to lien — a crime in Tennessee by the way — and most importantly, as these payments are pass through, the money HAS NEVER been repatriated to the US government even though they are seized in the name of HUD itself! HUD is well aware of this and has been for over a decade.
On the other hand, we are told that as both as US taxpayers and members of the media, firms whom abysmally perform on the M&M have their records whitewashed and they will never see the light of day. Once again, Foreclosurepedia is jam packed with hundreds of examples such as Innotion Enterprises wherein overbilling, work not performed and other issues were identified by the HUD Office of Inspector General (OIG) only to have the OIG let firms write the final report themselves and simply get re-awarded multi-million dollar contracts in the next offering. Here is how HUD put it when they first hit Innotion Enterprises,
Innotion did not always perform property protection and preservation services according to contract requirements. Specifically, 38 of 96 (39.6 percent) of all properties selected materially failed our review because homes were not secured or properly maintained. As a result of Innotion not always following HUD’s and its own policies and procedures, compounded by its inadequate quality control, HUD did not have assurance that Innotion maintained REO homes at the high standard of care required in the performance work statement. HUD paid Innotion $11,210 for monthly services for 38 homes that did not reflect a high standard of care. If Innotion does not implement adequate controls and procedures to address property protection and preservation deficiencies, HUD will spend approximately $1 million for inadequate services over the next year.
Less than a month later, HUD OIG rolled out yet another report on Innotion, this time accusing them of overbilling HUD,
We found that HUD paid for unnecessary administrative costs of Innotion’s subcontractor under HUD’s field service manager contract. This occurred due to the unclear definitions of actual and administrative costs in HUD’s contract with Innotion. Although the contract stated that Innotion could pay only the amount billed and not add its own administrative costs, it did not specifically disallow the payment of administrative costs incurred by a subcontractor, such as One Stop, that subcontracted Innotion’s work to other termite inspection contractors. As a result, 30 percent ($4,914) of the termite inspection costs paid by HUD in our sample were for the administrative costs of Innotion’s subcontractor. If HUD does not revise its field service manager contracts, it may continue to pay for unnecessary administrative costs for termite inspections and other passthrough costs submitted by its field service manager contractors.
If you want to truly read what a scandal it was in how the mark ups in pricing happened up and down the pike, simply go here. I belabor the point, because first, HUD knew what they were doing when they decided to re-award the Contract to Innotion Enterprises, yet again in the most recent round of Awards pre-HUD M&M FSM 3.12 wherein, once again, Innotion did another spectacular belly flop. And while HUD OIG was almost forced to investigate these claims — while refusing to take testimony from others with respect to ex cons being paid and ongoing fraud at CWIS LLC, the reality is on the FHA side, there is zero recourse and it is the Mob’s wet dream when it comes to bilking the US government. Once again, none of this is a surprise to HUD.
In closing, on 27 January 2023, MarketWatch reported on Verisk underperforming when compared to their competitors. Here is what they had to say,
Verisk Analytics Inc. closed $41.96 short of its 52-week high ($222.11), which the company reached on April 6th.
The Biden Administration is in a tough spot as they now must come to terms with their Campaign promises of ridding the swamp of, well, the swamp monsters. The question that presents is whether or not HUD will continue churning out the dollars to protect firms like Verisk, whose pricing is embedded in each and every payment made on both pre and post conveyance assets.