Fri Nov 26 8:42:37 EST 2021
Home#COVIDConstruction Prices Skyrocket Highest Since 1979

Construction Prices Skyrocket Highest Since 1979

NAMFS Members Reaping Billions Of Dollars With $3 Inspections

Construction costs for single family residences topped  11.8% year-over-year in September, and has continued its climb over the past several months and ranks the most since 1979. In fact, according to data from the Commerce Department and as reported by Wolf Street, the index is up 17.6% since last September. Even more significant was Wolf Street’s following comment,

Shortages of windows and glazing have been reported for months. A survey of homebuilders, conducted by Burns Real Estate Consulting and released last week, found that 63% of the current construction delays of homebuilders are due to the shortage of windows. Lead times that were normally 2-3 weeks reached 4-15 weeks and for some products extending to 20-45 weeks.

These very same cost increases and time frames are present in the Mortgage Field Services Industry; however, unlike in the real world the Industry has stonewalled any price increases for over two decades. And with Labor leaving in droves from the Industry the solution proposed by the National Association of Mortgage Field Services (NAMFS) Executive Director, Eric Miller, is to send him $120,000 and he will find an unnamed company in an unknown location to do the job he is paid $138,000 a year for. It is the epitome of modern day slavery. In essence NAMFS members pay Inspectors $3 per inspection — that is not a typo — to determine if a home is vacant or occupied. Inspectors are required to hold General Liability Insurance, Errors and Omissions Insurance, Commercial Auto Insurance, pay for software, background checks, and fuel among other expenses. Those monies are then often held for up to 45 days with many inspections being back charged — meaning that they are never paid. One would think with that high of a profit margin that NAMFS could hire their own lobbyists. It is simply yet another black hole to suck money from Labor just like Miller’s failed deal with Aspen Grove Solutions (AGS) and their background checks.

The news gets even more gloomy for the Biden Administration when you look at home sales compared to last September which are down by 18%. Additionally, housing inventory for sale is at its highest level since 2008.

At some point, the Industry will have to contend with the simple and salient fact that people are no longer willing to work for $3. Fact of the matter is Bank of America, a large Client for NAMFS members, requires a minimum of $15 per hour in guaranteed pay for any of their Vendor’s subcontractors. And yet not a penny of it is reaching Labor. With more than 4.3 million people leaving their jobs in August, the reality is that no matter how much volume is released into the Industry, it is doubtful that anyone will be around to perform the services. And for anyone whom says that NAMFS members are not becoming obscenely rich, simply take a listen to Altisource Chairman and Chief Executive Officer William B. Shepro. Shepro kicked off their Earnings Call on 06 August 2020 and clearly defined the value of the distressed asset space by saying,

In a normal market, we estimate that for every 1% increase in delinquency rates, the addressable market for our default related services increases by approximately $700 million. Based on the increase in 30-plus day delinquency, since the beginning of the year, we estimate that the addressable market for our services has grown by over $2.7 billion.

Billions of dollars in revenue and $3 inspections. Now that is something for NAMFS members to truly be proud of.

Paul Williams
Linux addict buried deep in the mountains of East Tennessee.
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