The National Association of Mortgage Field Services (NAMFS) may be in for the fight of its life. The State of Florida has passed new legislation which cracks down on those whom are processing Insurance Claims and doing such without a license. Many of the NAMFS Membership have offices in the State of Florida. To date, not a single word has come from Eric Miller, NAMFS Executive Director, whom is tasked to have a firm understanding of the constantly evolving regulatory landscape. In fact, Miller whom is paid over One Hundred and Twenty Two Thousand Dollars per year; Miller, whose salary consumes over SEVENTY FIVE PERCENT of all NAMFS dues, doesn’t seem to have much of a handle on anything.
While Paul Magaha, the NAMFS Treasurer, is fighting battles to simply keep a job after jury verdicts of over $2.2 Million in the first 11 misclassification of employees, the reality is that as I predicated, 2017 would be a year of NAMFS having a Come to Jesus Moment.
Florida House Bill 911, which is set to take effect on 01 January 2018, makes it a third degree felony to participate in insurance claim matters without a public adjuster’s license. That covers ALL FHA INSURED FORECLOSURES. It also covers all hazard claims as well as all damage and storm claims. Here is what a few pertinent parts from Florida HB 911 have to say,
(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.
William “Chip” Merlin, is the founder and President of the Merlin Law Group. Chip served as Chair for the Bad Faith Insurance Litigation Group and Secretary for the Fire and Property Insurance Litigation Group for the American Association for Justice (formerly known as the Association of Trial Lawyers of America). He was also Vice-Chair for the Subcommittee on Property Insurance Law for the American Bar Association. In fact, here is how Chip Merlin, of the Merlin Law Group, recently summed it up on his Property Insurance Law blog,
All an enterprising State Attorney would have to do to build a case is simply send investigative subpoenas to this contractor and take statements from that contractors’ employees who solicit contracts. The State Attorney would then inquire of policyholders what the company representative told them at the time of solicitation and during the claim. The State Attorney could also send investigative subpoenas to the independent and company adjusters who negotiate the claims with the contractor to determine who wrote emails about the insurance claims and what the company representatives said and did during the claims process. This would establish whether a person not licensed as a public insurance adjuster or an attorney acted to “aid,” “prepare,” or “negotiate” the insurance claim. As an aside, I suggest that insurance adjusters should be careful not to aid those who are endeavoring to break Florida law.
This brings up some serious questions with respect to the multi billion dollar Mortgage Field Services Industry at two levels. First, all FHA insured, foreclosed properties will eventually have what is known as a FHA 27011 insurance claim submitted. This is the form which financial institutions submit to bill all the services rendered upon the property and additionally to claim the outstanding portions of the loan. There are two parts to the FHA 27011.
The first stage, Part A, notifies HUD that the property is coming and triggers the title transfer of the property. It is through this process that a servicer receives the unpaid principal balance and the accrued interest related to a foreclosed loan, Brinkley says. The second part, Part B, is processed after the title work is approved by HUD and requests reimbursement to servicers for all out-of-pocket advances – both escrow advances and corporate advances (court and attorney costs, preservation and protection expenses) – incurred throughout the delinquency of a loan and the foreclosure process.
We are awaiting comment from Chip Merlin himself; however, his staff tend to agree that anything performed under the FHA 27011 and hazard claims in and of themselves, appear to be qualified under this new Florida Law. We will keep the Foreclosurepedia Nation in the loop as this story continues to evolve.