It seems there isn’t a day which goes by anymore when we do not read about yet another National Association of Mortgage Field Services (NAMFS) Member settling a lawsuit for committing fraud, destroying someone’s life or some other type of heinous act committed against mankind. At the head of the pack, time and time again, is Safeguard Properties (SGP). SGP is an equal opportunity offender whom spreads hate and discontent around like Lysol in a hospice lodge. As predicted by Foreclosurepedia, the settlements have begun with respect to SGP. Maryland lined up for $167,000 and like the One Million Dollar Illinois Settlement, it was the Consent Decree which have hampered the nefarious ambitions of SGP and which have allowed for this quid quo pro to exist wherein Contractors privately know they operate as legates of the Client and yet publicly they allow for the perception to exist that they are, in fact, Independent Contractors — NAMFS will have it’s memory refreshed as yet another Employee vs Independent Contractor suit opens up in US District Court against many of the same, tired NAMFS players. These Consent Decrees, while some what beneficial for consumers and which make for a hell of a photo op with respect to the Attorneys General thus far, I believe trespasses upon the territory of federal supremacy. More on that in a bit.
While HousingWire, NAMFS and just about every drive by social media pundit out there stated Safeguard Properties would never settle with IL Attorney General, Lisa Madigan, I did. I also predicted the settlement amount almost a year before it came down. And I predicted the cascading effect of the IL Settlement, by and through other States stepping up for a piece of Safeguard’s ass!
Attorney General Brian E. Frosh today announced a settlement with Ohio-based Safeguard Properties, resolving claims that the company’s inadequate policies and procedures resulted in Marylanders being wrongfully locked out of their homes or having their property damaged and belongings taken. Safeguard is the nation’s largest mortgage field services company, and contracts with lenders and mortgage servicers to provide services related to inspecting, maintaining and repairing homes in default or in foreclosure.
Under the settlement reached by the Office of the Attorney General Consumer Protection Division, Safeguard will reform its practices to protect homeowners from future abuses and will return money to impacted Marylanders. The Division alleged that Safeguard failed to properly screen, train and supervise its network of vendors who perform inspection and preservation work in Maryland. Consumers have made hundreds of complaints to Safeguard about improper conduct at their homes by Safeguard agents.
“Even when a home is in default or foreclosure, lenders and their agents must still comply with state law and respect the rights of homeowners and occupants,” said Attorney General Frosh. “This settlement is significant not only because of the restitution that will be distributed to consumers, but also because of the strengthened protocols and procedures that aim to protect homeowners from future abuses.”
Under the settlement, Safeguard has agreed to enact specific reforms to protect Marylanders, including:
- Implementing stringent background check requirements for employees and vendor agents, including evaluating prior misdemeanor convictions and prohibiting work by those with relevant felony convictions
- Ensuring that notices posted at homes and actions taken to secure vacant properties comply with Maryland laws to protect homeowners and tenants, including specific notice language and waiting periods
- Assuring its vendors that they will not be penalized if they report in good faith that they don’t know whether a property is occupied
- Requiring clearly posted notice to occupants when Safeguard’s agents enter a property
- Prohibiting the removal of non-hazardous personal property prior to foreclosure, except pursuant to court order
- Employing appropriate personnel to supervise and audit its Maryland vendors to ensure compliance with the settlement
- Maintaining records of all Maryland consumer complaints and, after notice, recording all calls from Maryland consumers to Safeguard’s toll free consumer hotline.
The Baltimore Sun ran a good piece on how Bank of America (BANA) raked a woman over the coals. Anca Safta, a physician at the University of Maryland Medical Center, laid out her nightmare with BANA in great detail in the Saturday Edition of the Baltimore Sun. The fact of the matter is that there are a percentage of homes, which make it into the pipeline, that should never have been there. This buttresses my claim that federal oversight is needed and needed now. There is an overlapping problem which connects both the servicing sector to the field sector.
Consumer advocates say servicers have a disincentive to resolve individual problems or fix error-prone systems because they can pocket default-related fees. Income from those fees, Diane E. Thompson of the National Consumer Law Center told the Senate Banking Committee in November, can outweigh servicers’ added expenses from default “for a long time.”
Stevens, the Mortgage Bankers Association CEO, said it was “ludicrous” to suggest that servicers were profiting from the foreclosure disaster. “They’re making mistakes, no question, but they’re not making money,” he said.
The big ones are. Bank of America’s servicing profits totaled nearly $3.8 billion last year, with its revenue for servicing fees and related income rising about 6 percent to more than $7 billion. Wells Fargo’s servicing-fee income rose 10 percent to $4.6 billion, even after subtracting the cost of unreimbursed default work.
“This is a very profitable business for us,” Wells [Fargo] chief financial officer, Timothy J. Sloan, told Wall Street analysts in April.
Article VI, Paragraph 2 of the Constitution is commonly referred to as the Supremacy Clause. It establishes that the federal constitution, and federal law generally, take precedence over state laws, and even state constitutions. I am not going to bore everyone with a Constitutional Refresher; however, a primer may be in order to elucidate precisely where I am going. In any lawsuit challenging state control over a federal power — immigration reform and the rights of states to enact legislation to deal with the issue is a classic case-in-point — the Supreme Court generally looks at whether Congress has established a national regulatory scheme and if so, states cannot regulate in that area. The Court also looks at whether the state law directly interferes or is in conflict with federal law. In all of these cases, the supremacy clause ensures that federal law takes priority over, or preempts, state law. The prioritizing of federal over state powers is known as the Doctrine of Preemption.
The Mortgage Field Services Industry is extremely problematic from a regulatory and jurisdictional point-of-view. Three years ago, Foreclosurepedia predicted the quagmire we are bogged down in today. I used the story of Edwin Meese III, then US Attorney General in the Reagan Administration, and the break up of AT&T. Fact of the matter is that even though many praise Reagan; while many worship Reagan much like priests in a distant monastery, no elected official had ever hated the civil service quite like Ronald Reagan and his band of slash and burn demagogues did.
No matter how much I find NAMFS Regime Offender Members to be offensive to the conscience, the fact of the matter is creating a patchwork of regulatory directives by and through a multitude of judiciaries whom are essentially Legislating from the Bench only compounds the problem. I am no friend of Safeguard Properties (SGP), the entity. I’d probably do lunch with Jaffa or Klein and in that I am able to separate the business from the interpersonal whereas many are not. With that said, I am gravely concerned with the multitude of multijurisdiction Consent Decrees. On the one hand, I understand that salient point that $167K in Maryland is jack shit to SGP. Even the $1 Million Settlement is a drop in the bucket provided that Klein’s CPA is capable of creatively working the ledgers. I am concerned because SGP has, in essence, bound all other Companies coming in their wake to an identical set of criteria to operate in states wherein SGP is or has been under a Consent Decree.
The question that presents is whether or not the multitude of municipal, county and state rulings rise to the threshold of trespassing upon federal rights. As, for the time being, the US Government has not publicly claimed a stake in the fiasco, the patchwork will remain in play. When the time comes, though, for the US Government to come in an overhaul the rampant criminality ongoing by Eric Miller and his Merry Band of #Fraudsters, there will be hell to pay.
Everyone within the Mortgage Field Services Industry is to blame. The highest levels of accountability, though, lay at the feet of the Board of Directors, NAMFS. By and through Eric Miller, a man whom is pushed to the limit to simply balance a checkbook, the reality is that as the only Trade Association in the Industry, NAMFS had not just a duty but an obligation to inject itself into the conversation. Being blunt, the fact of the matter is that the NAMFS Board of Directors have attempted to pull money and favors from both the Clients and NAMFS Members, all the while forgetting the fact that short term profits never equate to long term stability.
In the current climate of tight budgets and inflated expectations, change is not on the horizon. The quintessential victims, ironically, are the NAMFS Members themselves. And as Empires rise and fall, Foreclosurepedia witnesses it all. We remain as a stalwart sentinel in both times of turbulence and times of bountiful gains.