Category Archives: BOTG

PPI Fee Structures: Independent Contractor or Minimum Wage Employee

Organics Admin
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Organics Admin

COO at Aladay LLC
Organic Farmer, Property Preservation Specialist and Custom Glass & Wood Worker. Blogger extraordinaire...
Organics Admin
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CAN THE

NATIONAL PROPERTY PRESERVATION GUILD

SUCCED WHERE OTHERS HAVE FAILED?

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With the current climate throughout the Property Preservation Industry (PPI) it seems like this would be the perfect time for an organization advocating for the contractors to come together. One of the biggest issues in the PPI right now is the fact the 54.3% of Contractors surveyed feel like they are an employee.

Enter the national Property Preservation Guild (NPPG). On the surface seems like a novel concept. A group of Contractors coming together to represent themselves in the face the downward spiral the industry has taken no thanks to the only organization currently claiming to “advocate” for everyone in the PPI, National Association of Mortgage Field Servicers better known as NAMFS. When I search to see this organizations advocating activity it appears that the only ones they are advocating for is themselves and those companies that their Board of Directors represent throughout the industry, but that’s a story for another time.

Let us look at the NPPG and why they will have a very difficult time succeeding where others have failed. One of the biggest issues facing the Boots on the Ground Contractors (BTOG) is the fact that there are so many companies out there with a business model that is known as “subbing” and the companies that have become known as Regional Order Mills (ROM) have  these cushy contracts with the National Asset Management Companies (NAMC). You see the NAMC “sub” the work to the ROM and they remove a layer, usually 20% of the invoice amount for merely transferring the work order to another company. Who may in turn once again sub to a company who also does not perform the services thus creating what is known as an Otherwise Unauthorized Order Mill (OUOM).

Let us examine this for just a minute. The NAMC looks to reduce their overhead. The quickest way to do this is by reducing the amount of incoming companies they have to deal with. In order to do this they need one company that will cover say an entire state, thus they only have to deal with one entity. They let the entity deal with the 1500 vendors they had, pretty good business model. Now that company the ROM since they actually do no work they only transfer the work orders, finds say five contractors to cover the territory they have been given or the OUOM. Still a great business model as everyone in the food chain so far has yet to actually take on any financial risk or even do anything but transfer work orders.

Enter the BTOG. This is the group of people that actually put the resources into play that are required to complete the services for the “Client”. They pay labor, pick up the disposal fees, fuel costs, storage fees where applicable, pay for the new locks that are placed on the properties when the former occupants have moved out. So what’s the big deal you ask isn’t that part of doing business? Yes, but here is the catch, the ROM is receiving the same amount of money for service fees that the BTOG received 7 years ago, they take a percentage and pass it on to the OUOM and they take a percentage and pass it on to the BTOG. Now for the seasoned BTOG out there very few are doing lawn cuts anymore unless they are working directly with the main supplier of the work orders. The companies that are working with all the middlemen or “order mills” are doing so at their peril. You see seven years ago $0.80 to $0.85 on the dollar was actually going to the BOTG to have the properties serviced. Contractors made respectable livings and took a lot of pride in the product they delivered. Somewhere around the end of 2008 the philosophy that “the only way to make money in the PPI is to sub the work” entered the picture…Just as Marx forgot to include “the nature of the beast” into his socialism and communist theories of government the lazy capitalistic minded powers to be have forgotten to include the fact that someone eventually has to physically complete the services. With this current business model rampant in the industry the Contractors are only receiving approximately $0.25-$0.30 on the dollar. In addition this places the contractors in serious financial peril.

Financial peril you say??? I say this for several reasons. One, probably the most important one is the fact 61.4% of Contractors surveyed have stated they have completed services for a company having a business model of subbing work only to not get paid. This is the chain of events that has become an accepted business model by all participants in the PPI. The NAMC routinely take 30 days to pay or what is called “net 30”, the ROM allows for this by pushing out to “net 45”, the UOM goes to “net 60”. The “peril” for the BTOG becomes getting paid. You see they have to trust the fact that all the go between companies “subbing” the work to them is actually going to pay them and not tell them “We haven’t gotten paid by so-n-so and we won’t be able to pay you this week”, when the check is late. As previously stated the BOTG are financing the industry and everyone in between them and the lender or “client” has yet to assume any risk at all. It is the BOTG that must foot the bill to complete services and then wait 30+ days to be paid. This is sort of like you loaning your bank money for 30 plus days interest free. I don’t know of any bank that will make an interest free loan, yet the Contractors are required to assume all the liability, insure and finance this industry. Pretty sweet deals for the lender who has never done anything but make a bad loan taking the property as collateral and is able resell the asset.

Now let us go one step further and discuss for one minute the nonpayment issues plaguing the industry that NAMFS and NPPG seems to want to ignore. I say “ignore” as they have not taken a position on anything that directly affects the Contractors. In fact there is currently a NAMFS member that has made the headlines for not paying contractors(http://foreclosurepedia.org/yet-another-order-mill-in-ohio-screwing-contractors/ and http://www.katv.com/story/22944791/mid-ohio-field-services?goback=%2Egmp_4730139%2Egde_4730139_member_261277516),[prior to publication of this article I received a call about a company ASAP another member of NAMFS not paying Contractors, at this time I have not received documentation, but a complaint never-the-less. You can be assured this will be investigated and we will report what we find]. Here is how easy it is to net a million dollars in this industry and in a relatively short period of time.

Let us suppose for a minute that a NAMC has entered into a contract with a ROM that went into business last week. The contract involves the coverage of three states. The ROM decides not to use a UOM, so they are issuing work orders to 1,500 Contractors. Now let’s say the ROM decides they don’t want to pay for whatever reason…Oh say the CEO of said ROM wants to take a pretty girl around the world on a big fancy boat. So the ROM holds back $500.00 from every vendor this month. That nets the ROM $750,000.00 this month. Now the ROM knows that they have another month worth of invoices coming in within the next two weeks and the ROM knows they can do this at least two or three more times before the Contractors stop accepting work orders. So the ROM can effectively embezzle 2.25 million dollars within 90 days. I would say that is a pretty good income with assuming no risk while just transferring paperwork. That is their bonus, as they have transferred Seven million work orders at a 20% discount for an additional, let’s say 1.4 million (this number has been grabbed out of the air to make a point but the first figures are a scenario that is not only plausible has happened.). Please do not think I’m saying all ROM and UOM do this. But there is an above average amount of companies (compared to other industries) taking advantage of the “process”. So why is this not being addressed by any of the organizations claiming to advocate for the Contractors? Why haven’t any of the organizations developed a “Conflict Resolution Hotline”??? Especially since 66.4% of the Contractors surveyed feel that there should be an independent third party mediator for conflict resolution.

Many of you are probably asking yourself, why aren’t these BOTG companies placing liens on these properties? Another issue no group claiming to advocate for the contractors will take up. The “No Lien” clauses the Contractors are forced to sign. If anyone had any gumption at all they would know that 60% of the Contractors feel the lien clauses need to be removed from the contracts and that 62% feel that they should be allowed to lien a property if they have not been paid in 30 days.

When I look around the industry the only system I see is an Istar system that has been set up by the folks at Foreclosurepedia. The problem we have in the industry being unregulated there are no numbers to actually account for numerous times this has happened and for whatever reason there is a reluctance on the Contractors part to file a complaint in the Istar system so numbers can be entered into a matrix, which makes it hard for any organization or individual to be able to provide some concrete number. We can only hope that more contractors will get on board to stop the embezzlement epidemic plaguing the PPI.

By now you must be asking where I’m going with this and what does this have to do with the NPPG being able to succeed where others have failed???

  • For a group that claims to “advocate for the Contractors”, I could not figure out why the organization would not issue a position on this matter. Even thought they do not seem to be very organizationally minded, as evidenced by their changing of their mission statement 6 weeks after they came up with…get this statement…

The mission of the National Property Preservation Guild (Guild) is to facilitate an environment where clients are placed in the best possible position to ensure Return On Investment (ROI). The Guild will serve as an advocate for Contractors whom regularly deliver excellent service, with ethics and integrity as the foundation of their business. In addition to supporting members and Contractors, the National Property Preservation Guild will provide educational programs to confirm all members are qualified to supply the highest quality service to the clients they serve within the preservation industry. 

I’m guessing that there had to be pressure from somewhere,(http://foreclosurepedia.org/foreclosuregate-why-the-namfs-and-nppg-are-asleep-at-the-helm/), as the statement they now use places the Contractors in front of the “Clients” but still the organizations is concerned about the “clients” return on investment. This is how it now reads;

MISSION STATEMENT

The mission of the National Property Preservation Guild (NPPG) is to serve as an advocate for Contractors whom provide quality services that aid in ensuring maximum Return On Investment (ROI) for property preservation clients.

Now there’s a fine how-do-you-do intensely humble, backhanded approach, when claiming to be an association advocating for the Contractors. I have yet to see any lender have concerns that the Contractor stays in business or even cares if their power bill is paid. So why would any organization claiming to advocate for the Contractors have such grave concerns for the clients ROI? Unless…are there other motives in play?

Back to why the NPPG will have a very difficult time succeeding where others have failed. I believe it is the same reason that the NPPG is spineless and will not issue a statement or position paper concerning the ROM and UOM and why the industry needs to be rid of them. Many of the Board of Directors “sub” their work out. Now they can’t very well take a position against their own business model or take the position against other companies that sub the work out, unless of course, they could be allowed to continue with their business model. Which brings one to the issue, is the organization truly advocating for Boots on the Ground Contractors? According to the NPPG a BOTG Contractor is someone that goes out in the field and completes services. No I’m afraid by being part of the “subbing” portion of the PPI they are part of the problem plaguing the industry that they claim they want to help clean up.

What we actually have is a bunch of Contractor’s that really want to believe in something and are willing to listen and take a chance and follow these leaders of the NPPG. One has to wonder if this isn’t some sort of conspiracy by the NAMC. Have companies like Corelogic, FAS, Safeguard Properties, MCS etc. had some of their better Contractors infiltrate the NPPG and set it up to make things appear like there is really something or someone out there that cares FOR the contractors? Has this been done to make things appear that there is hope for the BTOG? Sadly I don’t know I have no answers for those questions. However, I believe in the days past, days of Jimmy Hoffa, these people would have been called “Union Busters”. However, they can’t be a union buster as the NPPG just recently announce that they will be an “Association” another sign of just how unorganized this group is. An “Association” that will provide an “educated qualified work force” to the industry. An organization that is going to “re-educate” the client on what a quality contractor “looks” like. Seriously? Now there’s a novel concept, I wish them the best of luck with that.

The original concept of the National Property Preservation Guild was that of; Boots on the Ground Contractors, Contractors that actually went out in the field and completed services, coming together so they could make a stand on the injustices currently going on in the industry. Contractors coming together to stop the downward spiral that, IMHO, NAMFS allowed to happen while claiming to represent all parties in the Mortgage Field Service Industry. I just do not understand why when a group or organization states they “advocate” for another group why there is no position taken in an advocating manner? Why hasn’t the NPPG taken a position in regards to the Service Contract Act? The SCA after all does affect the Contractors they claim to advocate on behalf of. Furthermore, why hasn’t the NPPG taken a single position on behalf of the contractors in regards to the numerous issues in contracts that basically make a company an employee with no employee benefits? Why has there been no comment in regards to the demand for a company’s employee’s personal information and all of their “subs” employee’s personal information to be sent on unsecured lines and unencrypted? Why has the issue of request for credit checks not been addressed?  I’m puzzled, as there are so many issues in the PPI, there have been even more opportunities given for positions to be made by all organizations claiming to represent and advocate for the Contractors. In defense of NAMFS you must be a member of their organization to receive acknowledgement for your place in the PPI. If you’re not a member of their exclusive club, you do not exist. If there was truly an association or organization out there honestly advocating for the contractors they would know the 68.9% of contractors surveyed feel that subbing on any level in the PPI, with the exception of trade specific services needs to leave the industry because they feel it is an exploitative business model.

As a colleague of mine has said in the past “Welcome to the Rabbit Hole” the long convoluted tunnel in the Mortgage Field Service Industry called Property Preservation. That is what makes this industry so easy to hide from the rest of the world. However, I, along with many others “in the know” if you will, throughout the industry am convinced that regulation will come to this industry. It will happen with audits, because of lawsuits, especially when the many health issues get exposed the industry has been able to hide for so long. It will happen with IRS audits of the Independent Contractor/Employee issues in the industry. It will happen as the media starts to get more and more involved with the graft and corruption plaguing the PPI that organizations like NAMFS and NPPG seem to see fit to ignore.

You see, when you have a group of people offering “lip service” instead of being in touch with how your base membership feels about what the organizations necessary actions should be  to correct the injustices in any industry , the only thing you’re assured of is failure.

Fury Learning: Education for the Property Preservation Industry.

Organics Admin
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Organics Admin

COO at Aladay LLC
Organic Farmer, Property Preservation Specialist and Custom Glass & Wood Worker. Blogger extraordinaire...
Organics Admin
Follow Me!!

Latest posts by Organics Admin (see all)

I have linked an article at Foreclosurepedia to this article as I feel one of the biggest issues in the Property Preservation Industry (PPI) is unqualified, knowledge lacking, and unskilled individuals running around assisting in the rock bottom fee structure in the PPI. As many of you know I worked in conjunction with Paul Williams over at Foreclosurepedia to help found the National Property Preservation Guild  (NPPG). When it appeared to me that the NPPG wanted to move the organization into a different dirrection that what I had envisioned (story for another time), I resigned as I felt I could be of better service advocating for the Contractors in a much better manner than the NPPG planned to do.

However prior to this event I worked very hard to develop an Educational Program for the NPPG as my thoughts about the fee structures are this…In order to be able to ask and expect to be paid top dollar you must have a in depth knowledge of the industry, laws in your local municipalities and most of all you need to be compitent in your ability to complete the services that are required in the PPI.

Back in 2011 over on LinkedIN Rob Preston was doing what many of us professionals do, shameless self promotion, he was pushing his education model for the industry. Just having gotten a first hand dose of people scamming the industry folks not in the know sort of speak, I blasted him, blasted him hard. Then I reviewed his material and found myself cleaning the egg off my face. When I started to develop the education program for the National Property Preservation Guild  I immediately thought of my encounter with Rob Preston and wondered if hey, will he even talk to me after the big production I made to attempt to discredit him??? Having nothing to lose I decided to contact Mr. Preston, Here is the resulting interview article I wrote for the NPPG and published on LinkedIN  back in April 12, 2013.

In 2011 we had a tremendous workload and we needed to increase manpower. Doing what comes natural to most business owners when this happens we ran some ads for help. One respondent stood out above all the others…Seems this gal had written a “how to” book on the Property Preservation Industry and just knew she would be a good fit with our organization. Since I only have an administrative role and anyone working for our company is representing someone else I had to find out why if this gal’s company was so good how come she was not receiving work from any of the clients we had in the area as we were overloaded. Well turns out this gal’s company couldn’t pass a QC inspection and they had been released by every national there is….So for some time I was always skeptical of anyone writing books on the industry.
In 2012 when Rob Preston announced the release of his first edition of property Preservation & Mortgage Field Services Training Guide, well naturally I was somewhat apprehensive. However, that did not stop me from blasting Rob for having his hand out for a piece of the rapidly shrinking revenue pie of the Property Preservation Industry. Did I ask Mr. Preston how he gathered his information? Did I ask Mr. Preston where his qualifications to write a book came from? Did I ask anything other than “What makes you so special you think you can sell us your drivel and separate us from our monies”???? Embarrassingly no…
Yesterday Rob Preston was gracious enough to overlook my antics from a year ago and allowed me the privilege of an interview on behalf of the National Property Preservation Guild in regards to his second publication for the Property Preservation Industry.
Rob has been in the involved in the industry on many levels since 1995. He brings a plethora of skills from 16 years of experience, learned knowledge and dedicated work with him to the typewriter. Was Rob satisfied with writing a book? Most people would settle for the success that Rob has had as a first time counterparts, in addition can give you an edge on the lazy employee as you now can respond you didn’t look in the manual? Combine this with the testing element and you have a way to not only provide continuing education for yourself and your company but you also have a vehicle for keeping your employees or subs current with industry information.
We all know things change rapidly in the business world. One of the changes I do see happening in our industry is regulation. Folks it is time we come together. Do yourself a favor and give this publication a look-see. As something tells me you may very well be looking at the future of the industry…
For all those whom may think I’m all knowing in this industry…well Rob invited me to take one the industry tests…89%…I’ll be in the library studying if anyone needs me…author who took this route out of frustration with the industry. Instead Rob believed that if the working class members, the group of people that we have fondly dubbed “Boots on the Ground”, yes those like you and me that work this industry to put food on the table, Rob believed that in order for some of the issues to be resolved that it would have to come from the Boots on the Ground coming together in a concerted effort via education. With that Rob developed testing, with procedures that one would find when taking any sort of test that was proctored for legitimizing certifications. He further went on to assist a national organization with their testing programs for recruiting new contractors. However, the main reason that Rob has gone to the extents he has is because like many of us Rob feels that the industry is lacking consistency. With the manual combined with testing in a continuing education format perhaps some consistency will come to replace today’s complacency.
So now that we’re all warm and fuzzy let’s talk about the 125 page 2013 edition of the Property Preservation & Mortgage Field Service Training Manual. This year’s addition is now a Paperback and has a condensed 75 page pocket reference manual for those of you who may want to have something in your trucks for that forgetful field supervisor you have…In addition the training manual references several links to “How-to” videos, for example in the section for pool covering the links takes you to the manufacturers web site of the pool cover company and you may view their production for their product, another example is in the rekey section you can click the link and you’ll be whisked to Lowes for their presentation of how to change a lock. Throw in some photographs, blue print style illustrations, diagrams and drawings and the “Newbie” is miles ahead of the game compared to 5 years ago. As now the Newbie has a list of required equipment for the industry, a detailed description and step by step instruction to complete services like winterizations, picking locks, etc. I had to ask about including “picking locks” playing on the side of caution, would this be considered a trade secret? Could this be construed as providing instruction for illegal activity? Rob investigated this prior to placing what some would consider “sensitive” information in his publication. Since this is an educational tool…I’m happy to inform you we are not burglars in training!!!!!
So what makes Rob’s book worth a look-see? I like the fact that not only is the product set up that any of your organizations field supervisors can use it and teach from the manual. Plus the condensed 75 page version handy pocket reference for the vehicles gives your company a little bit of an edge over your

 

I believe most know that I feel that the use of the term “Contractors” in the PPI is a misnomer. I base that on the fact I have a slight understanding of the difference between an Independent Contractor and an Employee. Make no mistake about this folks, there is currently a HUGE tax base out here in the PPI that will be looked at as things start to move forward, yes I’m referring to regulation creeping into the PPI. Sorry but I believe it is inevitable and unlike many that wish to place their heads in the sand and pretend that all is warm and fuzzy because regulation is not something they want, we have gotten our company in front of things . One of the ways NPOM  have made the Independent Contractors employees…buy demanding they partake in a specific organizations education model. Understand as an Independent Contractor you can not be forced into something without being given a choice. Demanding you take an organization testing and education is one of the many steps the NPOM have taken to systematically strip the spirit of the Independent Contractor rules and regulations from the industry, I believe the NPOM  disguise this by calling issues “mandatory requirements”. It is funny how small company’s will accept a “mandatory requirement” that raises their overhead with out question, and scream bloody murder when the subject of “regulation” is brought up,  But enough, as that is a story for another time.

I’m not going to get into other education models offered in the industry, well the only other I know of is an overpriced model with the organization NAMFS, which I have reservations about as they wish to certify people and have no qualifications to do so. I also know of another company I believe involves  SIRS, not real sure on pricing but again the big “C” word is used, certification. Not real big on the use of that term as it would indicate you have some sort of degree or your organization has been accredited and acknowledged as a higher learning institution, IMHO.

However in closing I will say this should you need to get in front of the “educationally qualified” buzz that is taking the PPI by storm consider Mr Prestons FuryLearn package. The price will not break the bank and you return on investment will be much safer than playing the stock market…

For more detailed examination of the training and education issues currently going on in the PPI follow the link below.

http://foreclosurepedia.org/rob-preston-mortgage-field-service-training-for-pros/

 

Have a great day everyone…and let’s be safe out there.

DISCLAIMER: MYSELF, OUR COMPANY NOR EMPLOYEES OF OUR COMPANY HAVE RECEIVED ANY COMPENSATION FROM THE FURYLEARN OR ROB PRESTON.