[AHS]

I have a good relationship with a fannie mae real estate broker. I do rekeys on all of his Fannie Mae properties. I would like to get my hands on the trashouts and lawn care for these properties but the broker said Fannie Mae uses the National and certified companies for the work. I read somewhere about if the broker submits a form 571, then he can use who ever he wants to complete the work. Does anyone know if this is true?

 

[FremontREO]

The broker is correct they have to use the national service company for the area that you are located. The 571 form is for maintanence/repairs up to the cost schedule.

 

[renet]

Form 571

Fremont,

Thank you so much for your post regarding this topic. Could you read thru my thoughts below and comment on them. (thanks in advance)

The broker will typically say - FNMA sends the property preservation and rehab company - we don't have any part of that. At the same time the broker also talks about how much money they have on the line for several listings paying up front for cash for keys. This can be in the multiple thousands of dollars per home and they can wait up to 90 days to get those funds reimbursed. The last thing they want to do is pay anymore invoices to other vendors.

On the other hand - the brokers "always always always" complain about the quality of workmanship that the "approved" contractor performs oftentimes thru subcontractors. So, logic says local contractors should fill the gap and that brokers would hire them but it's not how the system works.

So, along comes form 571. Believe me I am looking into this today. The first question I ask is: why would a broker suddenly want to fill in this form and do the projects per this method? The answers is simple: to work with a desirable contractor who performs well and on time and giving the broker back more control over his listing. But, there is a hurdle to overcome. Back to paragraph #1 above. Broker does not want to incur anymore expenses and waiting for FNMA to reimburse.

With all these thoughts in mind the broker might do this if it's just for small non costly repairs - can perhaps easily pay the vendors bills - or, the vendor may be willing to be paid when broker is paid - which for small jobs most vendors could carry the cost. However, on the larger rehab project up to the amounts on form 571 (I have to study this more) many brokers would not be able to make payment at completion and many vendors cannot wait 90 days.

If you can go to the broker and up front explain your billing procedure that no matter how small or large the project is your company is willing to be paid when broker is paid than I think you could get brokers to use the form 571 method because you solved one of their biggest headaches with these "approved contractors" that perform work on their listings.

 

[FremontREO]

Renet,

It sounds like you answered your own question:thumbsup:

This is only my opinion but......I strongly feel that the way Fannie does the reimbursements are driving out the "mom & pop" realtor firms from doing this business since they don't have the money to "finance the bank" to have the work completed. All you have to do is go on your search engine and find a Realtor Forum, similar to contractortalk, and this is the #1 complaint is that they cannot afford to pay all this money out of pocket.

Form 571 is for the smaller repair/cleaning projects such as carpet cleaning, small repairs, touch up painting, carpet stretching etc etc. Fortunately we work with some very good realtors but even they are getting "stretched thin" on how much they can afford to pay out. 1 realtor, who keeps current on payments every Friday, is out approx $80,000 (yes $80k) as of yesterday for non-reimbursed expenditures. They were complaining to me yesterday that the reimbursement payments are getting slower and slower--some well past 90 days overdue.

Form 1093 is to have approvals for over the $500 amount. These are the forms we work with weekly.

You are "on the right track" about telling the realtor that you will not accept payment till they are paid BUT technically the realtor is suppose to submit a copy of the check paid out to the contractor in order to receive reimbursement...I'm sure there are "ways around that"

As with anything else nowadays you gotta "pay to play". This affects the Realtors as much as the contractors.

We all drive by these homes and they are "falling down" from neglect and it seems nobody is doing anything about preserving the property...not entirely true. The truth is the Realtors can't afford to keep paying the repairs, utilities or the remediations, the Service Companies can't afford it either. One of our main companies today called and only wants us to bid to complete grass recuts on a MONTHLY basis....dah....dah....I'd bid that 2.5X the normal biweekly amount SO wheres the savings here people?
Deskjockey accountant type doing his/her job of trying to save the bank/client money:whistling

 

[skyboy1030]

Renet/freemont.

Renet I agree with freemont on being on the right track, however it appears if you keep researching you will come across the National vendors like FAS. Safeguard and others that now do all the "initial services" you mentioned you would like to do. Please be careful we have lost over $100K just last year from FAS for what they call discounts for too much debris, and not turning in invoices within the required 48hrs. That is a loss we will not recover. Freemont, sounds like you are either a SAM vendor or one of the vendors in your area that does not have a SAM vendor. That would be the next route for you renet if you truly do want to do the rehab work, but understand that $80k mentioned by Freemont, will now be your $80K plus. We run a consistent $350K in receivables as a SAM vendor and some of that is over 90 days. Fannie has always paid, (better than the agents), but you will still wait if you do not follow the protocal to the tee. Good Luck.

 

[mbobbish734]

I do fannie Mae all the time and experience the same issue. Work thru an agent, do rekeys and room photos and measurements . Then safeguard comes in and does the trash out and winterizing . Don't understand why they sound do that. Always shoddy work.

 

[skyboy1030]

mbobbish,

Safeguard, FAS are contractors like SAMs that have a contract to do the work in specific areas. The agents have no choice. I think all Preservation companies wish that would change, but not likely. FAS I know does every house as a flat fee of $800 for all initial services, and then makes its contractors discount the whole job if it is over 20 yards of debris, and that discount starts at 20%. From what I have seen for pay that would look like this:

23 yrds debris $32 yrd, before discount $736, minus discount $588.80
Janitorial before discount $125, after discount, $100
Initial lawn before discount $75, after discount, $60
Winterization before discount $110, after, $88

Total job: $1,046 before disc. , after $836.80,
Total amount discounted $$209.20
(and that is if you don't get QC declined for a missing photo, which for us happens over 95% of the time, then its another 10% off the top.

This as you can see is a total scam, not sure what all of us could do, but its not good business.

Skyboy

 

[mbobbish734]

mbobbish,

Safeguard, FAS are contractors like SAMs that have a contract to do the work in specific areas. The agents have no choice. I think all Preservation companies wish that would change, but not likely. FAS I know does every house as a flat fee of $800 for all initial services, and then makes its contractors discount the whole job if it is over 20 yards of debris, and that discount starts at 20%. From what I have seen for pay that would look like this:

23 yrds debris $32 yrd, before discount $736, minus discount $588.80
Janitorial before discount $125, after discount, $100
Initial lawn before discount $75, after discount, $60
Winterization before discount $110, after, $88

Total job: $1,046 before disc. , after $836.80,
Total amount discounted $$209.20
(and that is if you don't get QC declined for a missing photo, which for us happens over 95% of the time, then its another 10% off the top.

This as you can see is a total scam, not sure what all of us could do, but its not good business.

Skyboy

I understand that. But half the time I roll up to a property, the grass is a foot tall, garbage in the yard and a sign in the window that's says" property maintained by fas for questions or comments please call ***-***-**** . What gives. Are they getting payed for not doing the work? Basements always flooded with mold everywhere, because property has a sump pump that would work but no power to property. I just don't see how they think they saving money in the end with what they are neglecting. Who wants a house full of black mold. You need a canoe to inspect the basement. I guess they got their tarp money. Oh well.

 

[thanohano44]

I understand that. But half the time I roll up to a property, the grass is a foot tall, garbage in the yard and a sign in the window that's says" property maintained by fas for questions or comments please call ***-***-**** . What gives. Are they getting payed for not doing the work? Basements always flooded with mold everywhere, because property has a sump pump that would work but no power to property. I just don't see how they think they saving money in the end with what they are neglecting. Who wants a house full of black mold. You need a canoe to inspect the basement. I guess they got their tarp money. Oh well.

FAS has to submit these to their servicers/clients as well. With the inventory they have, they just don't have enough eyes or man power to effectively maintain these properties.

 

[JarrattProp]

FAS has to submit these to their servicers/clients as well. With the inventory they have, they just don't have enough eyes or man power to effectively maintain these properties.

The problem that I see with Nationals is that they have grown to rapidly. In todays market they just can't handle the volume. Instead of banks, etc dealing with a lot of small vendors they prefer to deal with one or two Nationals. I'm not complaining because when we purchase REO's we get big discounts due to the neglect by the Nationals.

 

[mbobbish734]

The problem that I see with Nationals is that they have grown to rapidly. In todays market they just can't handle the volume. Instead of banks, etc dealing with a lot of small vendors they prefer to deal with one or two Nationals. I'm not complaining because when we purchase REO's we get big discounts due to the neglect by the Nationals.

I too like the discounts you can get on REO' s . But somehow I feel in the long run I'm paying for them anyway. How's the value of your home since this all hit. It's great to flip these,but the money you can make was already taken from our homes. With what I see on a daily basis the nationals should be getting huge charge backs for neglect. If they agree by contract to take on these homes and don't have the man power or "eyes" to preserve them who's fault is that? Surely if we did the same they would be after us. Where's the government when you need them? I'm hoping that this will come back to bite these giants in the end, and bring back the quality companies small or large that do what's supposed to be done." Protect and preserve the clients collateral "

 

[JarrattProp]

I too like the discounts you can get on REO' s . But somehow I feel in the long run I'm paying for them anyway. How's the value of your home since this all hit. It's great to flip these,but the money you can make was already taken from our homes. With what I see on a daily basis the nationals should be getting huge charge backs for neglect. If they agree by contract to take on these homes and don't have the man power or "eyes" to preserve them who's fault is that? Surely if we did the same they would be after us. Where's the government when you need them? I'm hoping that this will come back to bite these giants in the end, and bring back the quality companies small or large that do what's supposed to be done." Protect and preserve the clients collateral "

I understand. I am new to PP with the exception of our properties and some of our RE investors. However I'm learning very quick that this Nationals thing is just a scam. I'm all for profit IF you are doing the job correctly.

We are a buy and hold company so the value is not really our concern. The reason we entered this field is because the unkept vacants are making it hard for us to rent.

I signed on with a national to do grass cuts and they wanted to pay $28.00 per yard covering a 100 mile radius. No thanks. I will just buy the foreclosures close to my properties.