NAMFS hopes this message finds you well and is providing an update on our ongoing initiative to enhance compensation for property inspections and preservation work. NAMFS, as the leading industry association, recognized its responsibility to create a platform for dialogue and collaboration among stakeholders. The Association’s primary role is to facilitate discussions between Investors, Insurers, Banks, Mortgage Companies, National Field Service Providers, as well as regional and local organizations. By fostering open conversations, NAMFS aims to establish a consensus on equitable pricing that considers the complexity of services rendered, regional variations, urban versus rural distribution, and industry best practices. This project is one that we recognized from the outset would span multiple years due to these complexities.
In collaboration with Gatehouse Strategies, NAMFS has diligently conducted a series of informative sessions aimed at enlightening Investors, Insurers, Banks, and Mortgage Companies about the escalating costs associated with property inspections. Initially, NAMFS’ focus was inspections and we collected data via an industry survey. The compilation of this data was then shared in meetings with Fannie Mae on 03/2022, HUD/FHA in 04/2022, and as a panelist the National Property Preservation Conference held in 11/2022. After these dialogues and with time to review and gain necessary approvals, Fannie Mae has elected to elevate their inspection allowances to $30 for exterior inspections and $45 for interior inspections, effective 3/8/2023. Freddie Mac has mirrored this adjustment for inspections effective 8/9/2023.
While these developments are significant, they were but the first step in our initiative. In Q1 2023, NAMFS undertook another survey with a focus on ten (10) common property preservation services. We also evaluated four (4) independent cost estimator solutions across eight (8) unique MSAs to compare their results with our survey. The compilation of this data was then shared, along with updates to inspections and the sense of urgency for adjustments, in meetings with Fannie Mae and HUD in 08/2023. Fannie Mae has committed to reviewing preservation allowables on an annual basis and inspections every six (6) months. HUD has acknowledged the protracted delay in updating property inspection and preservation allowances. They communicated their intent to release revised guidelines and allowables. NAMFS has offered to be of additional assistance in obtaining independent data.
Upon completion of these two (2) efforts, NAMFS is only at the halfway point of our overarching endeavor. The culmination of our collective endeavors and the realization of this initiative’s success will be evident when:
- HUD/FHA aligns their inspection allowances with the prevailing industry standards.
- Banks and Mortgage Companies endorse the disbursement of the full permissible compensation to National Field Service Providers.
- Investors and Insurers recalibrate Property Preservation allowances to accurately mirror the tangible costs incurred by your organization in the field.
- Defined periodic review of allowables with NAMFS participation.
It is worth noting that, due to a range of factors, inspectors and maintenance vendors in the field are unlikely to experience an immediate uptick in remuneration until HUD finalizes these increases. A substantial majority—approximately 80%—of monthly inspections pertain to properties insured by HUD, making any current incremental adjustments negligible, given the exceptionally low rates of delinquency observed among Fannie Mae and Freddie Mac loans. Furthermore, to circumvent potential borrower dissatisfaction regarding imposed fees, Banks and Mortgage Companies tend to adhere to a standardized inspection fee when engaging National Field Service Providers, irrespective of the investor or insurer involved. Consequently, this practice frequently translates into the utilization of the lowest allowable fee across the board.
With our ongoing dedication and sustained engagement, we are optimistic about the prospect of fostering continued dialogues with Banks and Mortgage Companies. These interactions will serve to advance educational efforts and rally support for the comprehensive implementation of the full permissible compensation across all delinquent assets.
Thank you for your steadfast commitment to this initiative. Your partnership is pivotal to its success. Should you have any queries or require additional information, please do not hesitate to reach out.