It looks like California’s Assembly Bill 5 (AB5) has finally hit the radar of the US Department of Housing and Urban Development (HUD). AB5 is the codification of the California Supreme Court’s 2018 decision in Dynamex Operations West, Inc. v. Superior Court (“Dynamex”). In a nutshell, AB5 pertains to employee misclassification. For years, the Mortgage Field Services Industry has known they have misclassified employees as independent contractors. Beginning with Hurst v Buczek Enterprises in 2012, wherein Buczek Enterprises paid Field Service Technician Brad Hurst “six figures” to settle a claim of employee misclassification and continuing with the Vinson Settlement wherein Mortgage Contracting Services (MCS) we believe paid millions to keep Field Service Technician Bennett Vinson silent, the Mortgage Field Services Industry is reeling and many are asking why Eric Miller, Executive Director of the National Association of Mortgage Field Services (NAMFS) refused to allow discussions with respect to this subject. Recently, in the Bowerman jury verdicts, 7 out of roughly 150 cases found awards of $2.2 Million against Assurant Field Asset Services (AFAS). Additional cases are pending against ServiceLink, formerly LPS, as well as Altisource. Finally, the California Employment Development Department (EDD) has begun assessing hundreds of thousands of dollars in fines against NAMFS members for misclassifying employees throughout California.
It is not simply in the Blue States that employee misclassification litigation is underway. Elizabeth Elinknan is suing RP Field Services, LLC, and National Creditors Connection, Inc., in the United States District Court for the Southern District of Georgia claiming unpaid overtime and minimum wages. The story is telling in that the Judge sent them to mediation and then threw out the number for being far too low — Tack one up for Labor. And it is a continuing strategy to hammer the soft underbelly of financial institutions — the order mills — and begin to hold them accountable for their lax oversight as we pointed out in the federal Involuntary Bankruptcy Filing against Jack Jaffa and National Field Network. And as opposed to the Class Action filings we have seen recently, this is an FLSA Collective Action.
And it looks like an All Star Cast is set to hold NAMFS members accountable. So egregious were the requirements for inspectors by Five Brothers when they illegally stole the image of Mike Row, Dirty Jobs star, that Rowe took to the internet denouncing Five Brothers and their actions. Here is what Rowe had to say,
Consider my own recent inclusion in the employee handbook for Five Brothers Default Management Solutions. As you can see, when it comes to workplace fashion, The Five Brothers have deemed my sartorial choices as “Unacceptable.” Why? Clearly, Five Brothers prefers the look of freshly-laundered, malnourished millennials who go belt-less and wear dance slippers.
Am I offended? No. But clearly, if I’m unwilling to change the cut of my jib, I won’t be providing default management solutions anytime soon. And I suppose I’ll just have to live with that.
So, Five Brothers is now able to dictate Suit and Tie uniforms for inspections?! To truly appreciate the Comedy of Errors in which the Industry operates, one has to start from the beginning. To properly examine what is going on, we need go no further than look at NAMFS like a Cartel. Wells Fargo, the very same Wells Fargo whom has committed felonies for years and whose CEO John Stumph received a lifetime ban from banking, would be considered, like other Clients, the Boss. Firms like National Field Representatives (NFR), Mortgage Contracting Services (MCS) and other National and Regional Order Mills function as consiglieres to the Boss. And the Otherwise Unspecified Order Mills — those low level hacks subbing the work out — are the underbosses issuing out work orders to the foot soldiers. While even sitting Presidents are not granted documentary immunity, NFR admitted, in writing, that they could not, or would not, produce documents which gave them the authority to systematically loot Minority Females and Labor.
Hi Hank, (Editor’s note: Hank Cossingham ran NFR at the time)
I have conferred with Shelby and here is our best explanation of how we receive our charge backs.
What we get from WF are spreadsheets containing hundreds of records/data with either a bill back or adjustment, which we then research and dispute or agree with if warranted. There is no specific individual document, like a HUD Demand letter specific to an loan, that we could send. We have never had this request before and these spreadsheets can not be sent to the rep as there is nothing listed that tells the rep which record is theirs, as the spreadsheets do not contain addresses or our unique account numbers, they only contain invoice number and loan numbers and lots of other data specific to WF and NFR. Also there is nothing that shows, to the rep, that it came from WF as it comes to us in an email as an Excel document attachment.
Shelby suggests that you may want to go to Brad to see if there is anything, he can think of, that could be sent to the reps to be able to prove to them NFR was indeed charged back by WF.
Let us know if we can be of further assistance.
Wendy Luck, Invoicing Department, Senior Invoicing Coordinator, NFR
Par for the course. In essence, NFR is stating they are taking money from Labor; they cannot explain why they are taking the money, and NFR has no legal documentation to present to Labor when they take the money. If that isn’t the Mafia, I do not know what is! It gets better, though. In 2003, NAMFS met at the HUD Washington DC offices. Present were a hodgepodge of up and coming NAMFS personnel whom were, at the time, deeply offended by NAMFS’ founder, John Ward’s cavalier way of brushing them off. Foreclosurepedia exclusively obtained the Minutes from that 2003 meeting,
As early as 2003, John Ward, founder of the National Association of Mortgage Field Services (NAMFS), knew full well that Minority Females and Labor were not being paid by his NAMFS Cartel Members. In an internal email, obtained exclusively by Foreclosurepedia, Ward summarized a meeting between NAMFS and Richard Dunne of the US Department of Housing and Urban Development (HUD), which occurred on 09 September 2003, in Washington, DC. We confirmed its authenticity by interviewing one of the attendees. In an email dated 16 December 2003 at 06:59 am, Ward summarized the entire HUD Meeting between he, Leslie Bromer, Gail Bradshaw, Jenny Ruth Nix, Ray Washington, Richard Law, John Cahill, Dan Buczek, Joe McCloskey and Kevin Cook. And while most signed off on the Notes which Ward prepared, Dan Buczek did not. Buczek lost it in follow up conversations pertaining to the now infamous NAMFS 2003 HUD Memo.
For years, John Ward knew that many within his Cartel were refusing to pay misclassified employees for their work. In fact, John Cahill, of SIRS, was most vocal about it at the 09 September 2003. According to Ward, Cahill stated,
[…] contractors and inspectors were in some cases not being paid a fee for providing the “baseline” inspection information to the primary national contractor who was in turn charging the mortgagee the reimbursable for that information.
Ward goes on to document that Cahill stated,
[Cahill] also disclosed that some primary contractors are denying payment for this and other services by saying that their client, the mortgage servicer, was not paying them.
And here is where the story really takes off. When Cahill demanded that the US Department of Housing and Urban Development (HUD) — Richard E Dunne — force those within the NAMFS Cartel to pay what they owed, Ward and Dunne determined that it was not HUD’s responsibility. Had that been it, well, there would not be much more to write about. Let the Courts handle it. If Minority Females and Labor liked being brutally raped in public by the all white NAMFS Board of Directors, so be it. That, though, is not the end of the story. For the first time in the history of my research, HUD, by and through Richard E Dunne, stated that there was a Doctrine of Privity which did not exist between HUD and Minority Females and Labor. In that same discussion, though, Dunne, in conjunction with Ward and the NAMFS Cartel, stated that the claims for non payment were the responsibility of NAMFS itself.
After some discussion it was generally agreed that HUD’s primary relationship was with the mortgagee or mortgage servicer. The agreements between the mortgage servicer and their primary national contractor and the down stream site providers is not regulated by HUD and is a trading partner issue. HUD cannot force payment to anyone. HUD makes their reimbursable payments to the mortgagee based upon many factors and the mortgage servicer meeting the conditions defined in their contractual obligation. […] What a contractor provides, for how much, and the receipt or non receipt of compensation for delivering those services is a private sector trading partner issue.
I took the liberty of highlighting the term trading partner issue in the above quote from John Ward. The reason for this is that HUD was laying the onus of oversight of payment between NAMFS Cartel Members and the general public squarely upon the Cartel’s shoulders. In fact, it is mentioned again as Cahill states that while HUD is paying the servicers for photos — and I gather here that the enormity of photos required today would have been laughable back then,
John Cahill of SIRS stated that on site providers are in many cases being required to provide photos to the primary national contractor and are not being paid for those photos. Again HUD identified that as a trading partner issue. HUD is reimbursing the mortgage servicer according to their agreement.
Richard E Dunne, currently at HUD Headquarters, in Washington, DC, appears to have believed that debris removal only existed to create money for the NAMFS Cartel,
HUD has established that the current system of debris removal provides economies.
Provides economies?! More like creates enormous toxic mitigation issues. Dunne goes on to discuss bids and the requirement for second bids,
The purpose of requiring second estimates is to provide HUD with an accurate and comparative analysis of the services required. This should be an independent and competitive presentation of the best cost to HUD to enable HUD to provide fair and accurate reimbursement for the services provided.
If, in fact, that this is the truth, we need to determine how it is that Five Brothers, one of the first Members of the NAMFS Cartel, determined that they were exempted. Tom Kalas, Five Brothers General Counsel, stated in an internal Five Brothers email on 13 August 2013, that,
I digress. Let’s dig down into the nitty gritty of AB5 and the language, which according to HUD Senior Officials, could potentially make employees out of everyone. AB5 does have a Business to Business exception. And in layman’s terms, that exception says THAT PRICE LISTS MAKE AN EMPLOYEE!
The legislative history of AB 5 indicates: “[I]f a company does not permit its ‘independent contractors’ to set their own rates, or only permits rate setting in a narrow band, such claims of independent contractor status should be met with skepticism.” Analysis, Senate Cmte. on Labor (Jul. 10, 2019), p. 9. To satisfy the rate negotiation requirement, contracting businesses will need to provide evidence of rate negotiation or unique contract terms. This might take the form of differing rates and other terms in contracts with differing contractors for the same or similar jobs. Records of negotiation (e.g., emails or contract drafts) could also serve as proof. Businesses that simply set rates for contractors on a “take-it-or-leave-it” basis will have a difficult time satisfying this criterion.
This is the quote of the HUD Senior Official, with respect to the aforementioned,
The FSMs certainly wouldn’t be able to dictate price though, which would be a clear violation. I’m not aware of any challenges brought forth yet in California by an FSM subcontractor, but I do believe we’ll likely see one sooner or later.
While the first sentence is a death blow to pricing — e.g.; $15 Lock, $25 Cubic Yard Debris, $50 Winterization, $45 Grass Cut — the second sentence states the inevitability of litigation. And make no mistake that there is no difference in a price list from an FSM or any firm in the Industry. To get around the employee misclassification, over the past decade, a pattern has repeated itself, often in absurd fashion. Some firms demand you initial the bottom of the page of their Master Services Agreement (MSA); some make you sign separate forms; and some require your DNA — that last one was humor. Regardless, though, to say that there has not been price fixing and purposeful avoidance of coming clean, with respect to employee misclassification, is best demonstrated by a slide presented by the Honorable Ruth Kraft at the NAMFS #FraudFest 2018 in Denver,
Now, while I am not a lawyer, titling a slide FLYING BELOW THE RADAR certainly communicates to me that there is a problem and that no one wants that problem dealt with in court. It is distopian insanity at the highest echelons. We reached out to Counselor Kraft, in 2018, for a response to our position; however, none has been forthcoming in nearly two years. Kyle Nickles, former owner of NY Field Services and current owner of JK Field Services had this to say,
I think you are reading into that document a little bit. I was in the room during her presentation and even though I do not have a perfect memory I don’t remember getting the impression that she was trying to circumvent the law in any way. — Kyle Nickles, 12 November 2018
As we await the immanent release of the HUD Management and Marketing (M&M) Field Service Manager (FSM) 3.12 contract, I will be curious to see how many of the water bearing Prime Vendor contenders actually inquire with respect to AB5. I promise you this, I will find — much like G-d asked Abraham for — one person whom will come forward!