The National Association of Mortgage Field Services (NAMFS) has long been a thorn in the US Department of Housing and Urban Development‘s (HUD) side. Fact of the matter is that over the past several decades tens of millions of dollars in fiscal malfeasance have been attributed to NAMFS Members. The US Taxpayer has been treated much like a broken ATM. Leading this pack of miscreants has been a man named Eric Miller. Eric Miller, NAMFS Executive Director, has been at the center of a growing firestorm with respect to his refusal to allow the Media to view the NAMFS IRS 990, the NAMFS Income Tax form, required by federal law. This is the least of Miller’s concerns, though, as a scathing HUD Office of the Inspector General (OIG) report revealed precisely how mismanaged NAMFS Members have become with respect to America’s foreclosed properties covered by the FHA Insurance program. In fact, in October, 2016, Ronald J. Hosking, Regional Inspector General for Audit, 7AGA, delivered the following to Robert Mulderig, Acting Deputy Assistant Secretary, Office of Single Family Housing, HUD,
HUD paid claims for an estimated 239,000 properties that servicers did not foreclose upon or convey on time. This condition occurred because HUD did not have adequate controls to ensure that servicers complied with Federal regulations. As a result, HUD paid an estimated $141.9 million for servicers’ claims for unreasonable and unnecessary debenture interest that was incurred after the missed foreclosure or conveyance deadline and an estimated $2.09 billion for servicers’ claims for unreasonable and unnecessary holding costs that were incurred after the deadline to convey.
In fact, the Hosking report stated that, “[…] an estimated $2.23 billion in unreasonable and unnecessary costs to the FHA insurance fund [,]” had been unconscionably lost by FHA due, in part, to NAMFS Members inability to make deadlines. So, for those of you out there whom continue to preach just how good it is going with respect to running the Order Mills, the reality is that Foreclosurepedia’s predictions — almost to the day — are coming to pass. And let’s not bullshit around here, the ONLY reason US Taxpayers have continued to be raped, day in and day out, is because Eric Miller is impotent when it comes to Leadership. This was recently pointed out by the National Mortgage Servicing Association (NMSA) in a 30+ page document calling for standardization in the Mortgage Field Services Industry, something which Miller and NAMFS have fought against for nearly 20 years.
A commonsense policy for the treatment of vacant and abandoned properties would consist of uniform guidelines in two key areas: (a) the determination of occupancy status of the property and (b) securing a property that is deemed to be vacant and abandoned. The determination of the occupancy status without creating unnecessary risk for the occupant, property owner, servicer, and community is the critical starting point. Thereafter, a sound policy will provide consistent guidelines for appropriately securing the property; pursue the most prudent route for the preservation, maintenance, and liquidation of the property that appropriately balances the needs of all stakeholders; and ensure that the property becomes once again reoccupied in the most appropriate manner to support and meet the homeownership needs and standards of the community. — Ed Delgado, President & CEO, The Five Star Institute
Miller and NAMFS have continually attempted to keep properties in the pipeline as they are the lifeline for paying the Ivory Tower of Debt amassed by Miller’s cronies. It looks like the tide is turning, though. On point, are the six, fundamental points raised by NMSA which read like a verbatim transcript of what Foreclosurepedia has called for over the past several years. The most glaring example is the calling for a Glossary of Terms and Universal Work Order. Foreclosurepedia addressed this when we presented an Enterprise Vendor Management Platform (EVMP) a year and a half ago, based upon open source coding and accessible to all. In fact, Digital Matrix Group (DMG) utilizes identical technology in marrying Contractors to Hedge Funds for performing flips. Investors provide materials and pay in 1/3 increments with total payment cycle upon completion.
Since we are out in the weeds, though, which is about the only place Miller and the new NAMFS President, Justis Smith, of Rowe Enterprises, feel safe anymore, why not talk about this sacred cow they call Compliance. A good portion of the last, remaining serviceable loans out there are, in part, insured by FHA. In fact, to push the servicing through and for the financial institutions, along with NAMFS Members, to be paid, HUD – FHA requires that a FHA Form 27011 be filed. That is an Insurance Claim. And for years, NAMFS Members have been presenting bids and performing upon them — without an Insurance Adjuster’s license. Here is how Holly K Soffer put it in the November, 2016, Insurance Research Letter, reprinted from a September, 2016 DS News Article,
HUD guidelines mandate timely inspection and repair of property that serves as collateral for FHA loans. Many properties sit vacant for years before foreclosure, and during this time, damage occurs. HUD guidelines require that servicers must file insurance claims for damage, and that all damage, including damage caused by fire, flood, earthquake, hurricane, tornado, boiler explosion, and mortgagee neglect, as well as vandalism and theft, be fully repaired before conveyance. HUD allows mortgage servicers to use any “qualified business individual” to accomplish these goals. The problem lies in determining who those qualified business individuals are.
Historically, mortgage servicers have used P & P Companies to adjust the claims with the hazard insurance companies and perform all necessary repairs. But are these P & P Companies “qualified” to adjust the claims under state insurance laws? And more importantly, even if such companies do employ in-house licensed adjusters, are they violating state law by doing both the adjusting work as well as the repairs?
State insurance laws impose a minefield of regulation for the unwary servicer attempting to comply with these HUD mandates. Laws and regulations vary from state to state and, at the very least prohibit unlicensed adjusting by third parties, such as P & P Companies. Many states go even further and prohibit the adjusting company from having a financial interest in the restoration and repair of such property, while some require disclosure of such financial interest.
But why would public adjuster laws even apply to the mortgage servicing industry? The answer is simple. A third party bringing hazard claims on behalf of the mortgage servicer meets the definition of public adjusting in almost every state that licenses public adjusters (currently 45 plus the District of Columbia). Public adjusting is most commonly defined by statute, and according to the NAIC Public Adjuster Model Act, as one who “adjusts losses or advises an insured about first party claims for losses or damage arising out of policies of insurance that insure real or personal property”. The activity of the P & P Companies in bringing hazard claims on foreclosed properties falls squarely within that definition. Adjusting claims without a license is simply not allowed by state law.
Even more vexing for the mortgage servicers is that contracting with P&P Companies that have licensed public adjusters on board doesn’t always help the P&P Companies, and by extension, the mortgage servicers, to comply with these state insurance laws. Back to the Conflict of Interest Chart: nineteen (19) jurisdictions have laws which would ban a P & P Company from adjusting a claim and performing the restoration or repair work, twelve (12) have detailed disclosure laws and/or other nuanced restrictions, and still others have similar restrictions on other professionals such as “insurance consultants” who mirror activities of public adjusters. These laws create a potential legal disaster for the P & P Companies, and by extension the mortgage servicers, who are tasked with bringing these hazard claims.
Now, I know that Miller and Rowe Enterprise’s Justis Smith have other things to be concerned with, other than obeying the law. Fact of the matter is that the real reason why NAMFS has been stonewalling the release of the NAMFS IRS 990 form is that they are, for all intents and purposes, financially insolvent, as we demonstrated back last year. In fact, Eric Miller’s salary, a salary which Justis Smith does not have qualms with, consumes over SEVENTY PERCENT OF ALL NAMFS MEMBER DUES! I want you to think about that, for just a moment. Rowe Enterprises, whom almost entirely subsists upon Subcontractors, has absolutely no problem financing over $120,240 per year for Eric Miller’s annual salary. And where, exactly do you think that money comes from? You got it, Minority Females and Labor.
The State of Florida is making it a third degree felony to perform insurance adjustment bids without a license come January. Here is how the law reads,
(19) Except as otherwise provided in this chapter, no person, except an attorney at law or a public adjuster, may for money, commission, or any other thing of value, directly or indirectly:
(a) Prepare, complete, or file an insurance claim for an insured or a third party claimant;
(b) Act on behalf of or aid an insured or a third-party claimant in negotiating for or effecting the settlement of a claim for loss or damage covered by an insurance contract;
(c) Advertise for employment as a public adjuster; or
(d) Solicit, investigate, or adjust a claim on behalf of a public adjuster, an insured, or a third-party claimant.
And make no mistake whatsoever, Foreclosurepedia knows who is writing bids both company orientated and private, including overseas like VirtueWorx. Moreover, though, foreign nationals like Altisource and Patricia P McTaggart out of Atlanta, GA, are not exempted.
Whether it is enforcement of the law against what has become the lawless wild west of NAMFS headed up by Eric Miller and Rowe Enterprise’s Justis Smith, or the fines which HUD will begin to levy against firms like Innotion Enterprises, there is a New Sheriff In Town. Here is how one HUD official put it, speaking on condition of anonymity,
Liquidated damages will not go into effect until December, as both the solicitation and resulting contract allowed a 4 month grace period (August transition). However, Defective Performance Letters have been going out, which do count against CPARS/PPIRS, and can also be used for grounds for Termination if conditions are not improved.
At the end of the day, I would gladly settle for half a dozen low level processors being charged even over larger fish in the cesspool of NAMFS. The costs of legally defending themselves, resulting in bankruptcies for they and their families, will most assuredly send a message to those whom would dare to continue supporting the criminality which NAMFS has thrust upon the Mortgage Field Services Industry.