There are some monsters in the mortgage segment of the field services industry. Even if you do not perform the low-fee mortgage inspections, you are significantly affected by already high and always increasing insurance costs.
I would like to see the liability and errors and omissions (E&O) insurance underwriters separate the mortgage segment from the rest of the field services industry. Industry insurance costs rise very year. About 99% of all insurance claims in the industry result from actions, or lack of action, in the mortgage segment of the industry. In the mortgage segment, most of those claims are generated by the actions of just a handful of national and regional mortgage field service firms and their subcontractors. The few bad actors are hurting everyone in the industry.
I cannot image why the large insurance carriers are still writing insurance policies generated by the insurance agents who are writing the policies for the few national mortgage field service firms (and their subcontractors) … the firms who generate almost all of the claims in the industry. Insurance agents affiliated with the monster firms and the monster insurance claims should be carefully reviewed. It’s unfortunate that field service representatives in the insurance and commercial segments of the industry have to pay higher insurance costs because of the monster insurance claimants in the mortgage segment. Why don’t major insurance carriers analyze the claims statistics and chop off the head of some of the monsters filing the claims? It would certainly help their bottom line.
Insurance has become the antidote to poor performance at all levels in the mortgage segment of the industry.
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There’s too many hands in the cookie jar when it comes to residential insurance. Namely the fact that any claim filed for damage typically has to go to the mortgage servicer/company that holds the loan. This would not apply if there was no mortgage or a small balance left on said mortgage (varies between servicers/mortgage holders).
Bottom line to the above is this: Homeowners typically when they file a claim from damage have little to no equity. Or maybe some if doing fine, but the mortgage company has to get involved. Which means they get the check from the insurance company outright once the initial claim is put in…of course the initial may not apply if further damage is found which is another check/can of worms.
The mortgage company will then send out its payment schedule. Which benefits them the most since they can hold onto the money as long as possible to be used elsewhere. Any escrow claim otherwise is BS. Of course the dumb homeowner typically agrees to it.
Now, enter the contractor. Unless you hire one that is knowledgeable in all this, the rest will only do so much before they need payment to continue. In other words, they are cashflow-poor. Beyond that, if the “inspection” (which is done by some idiot independent contractor like me, that if we don’t know better, we just take photos of whatever) doesn’t pass muster on the chain back up, no payment released, or only some of it does. You see where I’m going on this right? Drag it out, keep the check longer, whole 9 yards.
I have done hundreds of these loss draft inspections over time (many were the same place at each stage). In that time I found 1. 1. One. One who had the money already (or got it on an equity loan), that had all the damage fixed upfront (we’re talking around a $30K claim) to be completed, THEN ordered the inspection to show it was done to get the whole check sent out. I still have yet to match that.