Will MCS Be The Next Target For Nationstar Xome?

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To say that Mortgage Contracting Services (MCS) is undergoing an extremely challenging financial state of affairs is an understatement. MCS is really a part of ASP MCS Acquisition Corporation, formed by American Securities LLC, to facilitate its acquisition of MCS Group Subholdings, LLC (“MCS”). How MCS ended up with American Securities LLC is born of a long and troubled slice and dice deal originating in 2013 by Concentric Equity Partners and TDR Capital. MCS was eventually repackaged with American Securities LLC in 2017, in a deal reported upon by the Federal Trade Commission.

With over $500 Million in debt, $32 Million per year in interest payments, and perhaps $8 Million in liquidity, MCS will be the quintessential collapse. To all but the Foreclosurepedia Nation, the implosion of MCS will be a black swan event.

The top heavy, ivory towers of debt are growing. The latest price tag is best understood by the MCS announcement, last week, of yet another promotion for a position unwarranted,

Chad Mosley has been elevated to the new role of Chief Relationship Officer and will oversee all of the company’s customer-facing functions. This will include the management of all MCS client teams as well as Business Development and Marketing.

And underpinning the continued waste at MCS is a refusal to migrate away from archaic technology, such as their ASP and .NET architecture — above and beyond the licensing costs, most of the modern world functions on PHP backbones. In fact, if you pull the 10Q and 10K financials on ServiceLink, formerly Lender Processing Services (LPS), and MCS, you will find that there are millions of dollars set aside, each year, to keep their core software of COBOL on life support. They do not even teach COBOL in universities anymore. Safeguard Properties (SGP) is also pouring millions of dollars into closed source technology to keep their DOS based software on life support. These realities; these secret sauces, to coin a term used by Jack McHenry at an International Association of Field Service Technicians (IAFST) Summit, are to the detriment of the Mortgage Field Services Industry.

SGP, since the death of its founder, Robert Klein, has been in free fall. For the first time in the history of SGP’s Annual Conferences, open dissent was heard at a meeting earlier this year. SGP’s current CEO, Alan Jaffa, has been incapable of maintaining the iron grip which Klein deftly demonstrated. And after years of litigation and consent degrees from the Illinois AG Lisa Madigan, the reality is that SGP is in dire straits. SGP’s long history of defrauding Minority Females and Labor goes all the way back to when Jason Marzec, a periodic Industry Consultant, shook down Contractors for money in order to receive SGP work. Marzec was fired, in connection with those allegations. That, coupled with the tens of millions of dollars in spurious insurance claims which helped drive one of the only three insurance underwriters out of the Industry, demonstrates the inability of SGP to successfully navigate the turbulent waters we are in today.

If I were to create a list of financially insolvent firms poised to address mergers, acquisitions and collapse, at the top of the list would be MCS, followed by National Field Representatives (NFR). Rowe Enterprises and Laudan Properties are probably neck and neck for the third spot. Ameritrust Residential, depending upon their continued dependence upon NAMFS order mills, as opposed to working direct with Labor, is a shoe in for bankruptcy according to Dun and Bradstreet, and picks up the fourth spot. From a purely merger and acquisition point-of-view, SGP and VRM Mortgage Services (VRM) are neck and neck for the fifth spot. The byline, on VRM, is the fact that their USDA and VA contracts are in jeopardy. USDA just rolled out a Sources Sought statement and word on the street is that there are several VA Inspector General complaints building steam as we discussed in our FireWire report, last month.

None of this comes as any surprise to the Foreclosurepedia Nation. We predicted the disruption, nearly a year ago almost to the day. As NAMFS members continue to fall, the morale and financial impact upon Eric Miller, NAMFS Executive Director, is palpable. Miller is paid OVER ONE HUNDRED AND TWENTY THOUSAND DOLLARS PER YEAR. This salary eclipses EIGHTY PERCENT OF ALL NAMFS MEMBER DUES! And being that last year’s NAMFS #FraudFest was a ghost town — it remained tens of thousands of dollars unfunded — NAMFS financial insolvency is guaranteed.

Minority Females and Labor have had it with respect to how NAMFS members continue their unabated campaign of waste, fraud, and abuse. And the fact of the matter is that they do not have to put up with it anymore.  Nevada saw total employment increased 3.9 percent, year-over year (YOY), ending in December. Utah’s economy similarly enjoyed strong job growth, with total employment up 3.1 percent YOY. Arizona similarly registered a 3.4 percent increase in December YOY employment. Colorado, Idaho and Texas were all similarly situated. After steady losses, Wyoming’s annual average rose for the first time in years. New Mexico and Oklahoma also recorded average job gains just under 2 percent for the year, significantly better than the relatively flat employment of recent years.

My hat is off to Guardian Asset Management, M&M Mortgage, Twenty Two Hill, and Northsight Management. These four firms have stepped to the plate with respect to the collapse of the NAMFS order mill system demonstrated by Primestar. These firms have thrown their hat in the ring and have come to an accord to support the Membership of the International Association of Field Service Technicians (IAFST). To that point, if you are interested in what the IAFST is doing, feel free to drop by the IAFST Southington Summit on the 9th of March by clicking the Registration Link below!


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