Guardian Asset Management (GAM) has been on a vertical trajectory since their acquisition by New Residential Investment Corporation last year. It should really come as no surprise as Foreclosurepedia made the prediction of the assimilation of the Mortgage Field Services Industry, in early 2019, by institutional players. And as opposed to the valiant efforts made by Star Trek over the Borg, assimilation is the name of the game in the Industry today. To this point, I am going to make a statement which is going to upset many of those pundits out there whom bobble head around whining about how things are today. Assimilation is good. By way of comparison, in the past we had dozens of firms whom trickled work down through dozens more, and Labor rarely, if ever, was paid on time, if at all. Financial insolvency was the currency of the day. There were five different phone apps and dozens more internal management software components. Today, we have seen enormous swaths of these firms purchased by multi-billion dollar hedge funds. One recent example was the New Residential conquest. New Residential also purchased pieces of Chronos Solutions. Both GAM and Chronos possess US Department of Housing and Urban Development (HUD) contracts with the former operating upon nearly a dozen HUD Management and Marketing (M&M) Field Service Manager (FSM) contracts and the latter deeply embedded upon the HUD M&M Asset Manager (AM) contracts.
New Residential wasn’t the only one out there snapping up firms, but they were certainly the largest. Mortgage Contracting Services (MCS) recently bought M&M Mortgage, the Lone Star family, vis-a-vis Hudson Advisors, gobbled up Northsight Management, and we saw several larger firms such as Laudan Properties and Rowe Enterprises close up their shops on the preservation fronts.
Mergers and acquisitions were not the only thing on the radar for those overseeing the consolidations. COVID has laid bare the financial realities of the Industry. The Cares Act funds were gulped down by many of the National Association of Mortgage Field Services (NAMFS) members like pigs at the trough as we wrote about last week. And to understand how top heavy these firms are, go no further than Sentinel Field Services. According to documents obtained by Foreclosurepedia, Sentinel gets the Golden Trough Award for bailout monies. Sentinel claimed benefits for only 7 people — amazing that only 7 people work at Sentinel. If we take the high end of the funding, they are being paid $6,250 per week. That is $25,000 per month! We reached out to Sentinel’s CEO for comment in an attempt to confirm this or the possibility that there was a typo. No answer was forthcoming.
And it isn’t just the M&A occurring or the pilfering of government funds at the trough. NAMFS members such as Safeguard Properties (SGP) are laying off hundreds of firms. SGP, according to internal sources, has laid off nearly two thirds of their in house personnel. Northsight Management has additionally cut a large swath of personnel. Altisource, as well, has been slashing their top C Level desk surfers.
So, why would I say that the institutional Borgs will be good for the Industry? Well, from jump these institutional firms are responsible for legal accounting. That means that the previous huxtering of chargebacks and simply no pay isn’t going to go to buy yet another boat for the C Level desk jockeys. It also means that the 31 flavors of submitting work is going to become more streamlined. And finally, there is going to be an extreme attrition rate from the weeding out of those whom are capable of performing and those whom are not. With this in mind, there is not a single high level source I have spoken with whom denies the fact that over the next 18 to 36 months, much of the large scale metropolitan work will be brought into a W2 — employee — setting.
The biggest problem we are currently seeing is that there is currently zero communication from those acquiring contracts — such as Guardian of the Altisource portfolio — with Labor. It is almost as if Management is considering Labor to be chattel. And in times like these, treating the extremely fragile network of Labor off cuff is never a wise thing.
A final note, if you are a construction firm capable of providing new home construction services in Florida, Investors would like to speak with you. Simply fill out the attached form and Foreclosurepedia will make the introductions. Preferential treatment is given to International Association of Field Service Technicians (IAFST) members. Over the next several months, Atlanta, Birmingham, Charlotte, Columbus, Indianapolis, Memphis, Nashville, and Raleigh are being added as well.