Roofing Business Talk
I recently got a large approval of a little over 30K from MetLife. Per my contract, I was included as a payee on the check. Sadly though, so was Wells Fargo. Don't get me wrong, because I do understand that they have a vested interest in having the property repaired to protect their assets. They are just notorious for being awful to work with, and tend to hold money hostage. Herein lies my question: How should I handle getting paid? I am worried that if I sign over the check so the HO can mail it in, I am basically waiving my rights to the money (as far as Wells Fargo is concerned). Their "company policy" is that they will release 1/3 of the money up front and pay in increments. My "company policy" is 1/2 of the money (or the first draft) up front, deductible upon completion of work, and the rest upon receipt from the insurance company. Should I refuse to sign the check over, and insist that Wells Fargo honor my contract? Or should I throw caution to the wind and play by the rules of this banking giant? I just want to make sure I get paid. Any advise would be valuable.
I don't believe your issue is getting paid, your issue is cash flow. I've yet to experience an instance where we ultimately didn't get paid by a mortgage company.
Were I you, I'd try playing hardball and send them the check requiring they endorse it. You have to be a bit careful though. The HO could always go back to their insurance carrier, tell them you're being difficult, they cancelled your contract and ask for the old check to be voided and that a new check be cut.
Another alternative is to require a 50% deposit instead of 1/3. A lot of it also depends upon what backing or support you have or can expect from the Homeowner. If they are on your side, you should be able to pretty much get what you want to out of the mortgage company.
I work on the insurance side of things. The bank is placing this in an Escrow Account if they are distributing the money as you wrote. Keep in mind a couple of things:
1) I'd be surprised if the Insurance Company issued the full $30K because they normally will hold back depreciation.
2). You will most likely only get from the bank, 1/3 of whatever amount the bank receives. For example, if they receive $21K, they will most likely only issue to you $7K to start.
3). The depreciation hold back, if applicable, may work to your advantage because the insurance company typically will not put the mortgage company on the "hold back" check that is issued once an invoice has been supplied to the insurance company. This means the hold back check may be free and clear AND should get to the customer in a reasonable time after completion.
4). If the bank is putting this money in an escrow account, they are going to want to inspect the property after the repairs. All this means is a longer time delay.
I wouldn't be shocked in this situation that you get the first draw from the bank and the "hold back" money before you get the rest from the bank.
I would suggest that you work with your customer and ask them to get you the department, direct person, telephone, fax number and email address contact with Wells Fargo. That way, you can ensure that the paperwork that is going to be necessary is provided both correctly and promptly.
Also, I would suggest getting your completion invoice to the insurance company the same day you are completing the repairs.
I hate to correct jtdew but if you handle it correctly, it isn't uncommon to get at least 1/3 of the total claim amount as a deposit and even 1/2 of the claim amount. Again, it depends upon your approach and the support you have from the HO.
In my experience, the majority of the time, if the mortgage company is on the ACV front end check, it is also on the recoverable depreciation/supplements back end check.
Escrow means the greedy bastiges from the bank are making interest on it the entire time they hold it and are in no hurry whatsoever to disburse those funds. How quickly you are able to get paid is often up to how you handle it. jtdew is correct in that if the claim is large enough, the mortgage company will generally send an inspector by. This is sometimes done at different points of the project to assess progress and release progress payments. What you need to do is make sure you're requesting that inspector at least a few days prior to completion as it generally takes them at least 5 to 10 business days following the requests before they make it out. You want to shave time off the process every chance you get.
Your lucky to have yours in 1/3 payments.,I had one that was in 5 installments.I played the game and basically fronted the entire project.But what can you do put the job on hold at each phase ?
Being assertive is one thing but as Mark said it is a very thin line before you lose the confidence of the customer.The mortgage company can make your experience miserable if your not on your game.I have found it difficult on several occasions just to call a mortgage company and discuss any information about the customer without the customer being present on the line as a conference type call.
On large claims I have always had the mortgage company on every payment throughout the entire process.If your civil and can justify the need for more percentage then I have also been pacified in the name of progress.They will expect you to be at a certain phase before you can have anymore funds and the inspections are more frequent.
If your name is on the check it has to be endorsed and submitted.As far as I know there is not any way around that.If your name is on the payments in the beginning then it will be there throughout.If your worried about getting paid have the homeowner meet you at the bank.It is not like that has never been done before.Just don't let them know of your doubts.
A couple things Reroof. I respect the experience of both RM and AD.... however I have NOT had to limit my draws to 1/3 or 1/2 as they pointed out Depreciation will be held back. I typically see 60%-80% in the first check and Depreciation being held to the end. Supplements are also to be on the back end.
Let it be known the Finance Co may hold and possibly keep if the HO is in Mortgage Default. In this day and age it is worth your time to verify that won't be an issue.
Finally your Contract is not with the Insurance Co it is with the HO and that other mess should not concern you as much. If the HO cannot fund the project remember not to work for someone poorer than you.
I agree roofcheck.,about the customers payment history.My 5 phase was due to the fact the homeowner was near default status.I forgot to add that.
But to judge a homeowner or to deny them my services because of their yearly income I don't agree with.Some of my best customers in regards to being thankful for my participation with their claim make under $100,000 per year.
I roofed 15 houses last summer on one street where the average income was well under $50,000 per year and got paid each time on time without question.I have a couple CEO's that owe me $43,000.They will pay but it has been a rat race.
I did not add my bank will no longer accept third party checks (HO name as well as their Finance Co signed over to RB Roofs makes it a third party).
Per RB Roofs 2012 Policy is care not what the Insurance Company will pay it is not my Co's concern. We price our Projects in accordance with our pricing and if their is a difference, well that is the HO's responsibility to hound their Insurance Company not ours.
I am posting a new topic momentarily for a better concept on dealing with Insurance Work that many may find crazy but smart.
I always found Wells Fargo to be the easiest to work with, at least in regards to getting first check cashed. Usually, all it took was to pick up the customer, drive them to the bank where a banker could witness them signing the check after showing ID and done. Never had a WF customer who was not willing to do that - they wanted to get things going ASAP.
Different $ amounts at different percentages overall on ACV checks written by various banks/mortgage companies but I always took, per my company policy, the max so I could to keep cash flowing. One guy with a $26k claim (up from adjusters $12k offer) on a one year old house received a $25k ACV check and turned the whole thing over to me so I could start his job right away. Cash flow!
"They are just notorious for being awful to work with, and tend to hold money hostage."
Are you referring to "they" as WF or all mortgage companies? Whether WF, Citi, US Bank or whomever, the great majority of loss draft processing is actually handled by Assurant Specialty Property who "earns" a substantial profit in this niche market. They will generally (supposedly) lose paperwork, checks, authorization forms and whatever else.
Typical ASP excuses: "The person handling that claim was transferred." "We never received the check." "The paperwork is under review." "You are not authorized to discuss the matter with us." These people are indeed notorious to work with and do indeed tend to hold the money hostage.
Always control the checks and paperwork and always send paperwork FedEx overnite so you have a way to track delivery. Make sure all required paperwork is included (after making copies) along with a signed authorization from the your customer that gives you authority to discuss with them (ASP) regarding anything pertaining to the issue at hand.
Inspections: When an inspection is required, call ahead so that inspector will show up around 80% to 90% completion. These people are usually third party sub-contractors who could care less if the work is 100% complete or not. All they need to report and verify is that the work is near completion and they are typically more than willing to sign off in order to move on to the next inspection.
As soon as I know the inspector has signed off, I send in all final paperwork including ins final invoice with supplementals, and all other missed or legitimate addl charges and always add the name of the mortgage company (for example; CitiBank) and Assurant Specialty Property so that all know that I (and the insured) knows who is really handling the loss drafts, checks, etc. Knowing they are "exposed" tends to move them to getting the paperwork completed and the final payments sent out faster.
I little more time spent in the beginning saves a whole lot of time at the end and gets the money where it belongs (your bank account) that much faster.
And, of course, make sure the HO is not behind on their mortgage payments.
I am not sure if it is my striking good looks or carrying a large balance at the bank but every week I deposit about 20 checks with mortgage companies as the payee with nothing on the back but my stamp and the customers signature. In 2 years I have had ONE come back as lacking endorsement.
I currently have 3 at Chase from customers too stubborn to listen. One has been sitting there for 6 months. I signed lien release waivers to ge the first check sent out and now the second is lost in their system after them cashing it. I have copies of it front and back with their info stamped all over it. I call on it about once a week and waste 2 hours of my life on the phone with idiots. The next time I drive through Atlanta I am going to get removed form their building forcefully.
I have told my guys that we wont build a job with chase as the mortgage holder unless the customer will just endorse the check to us.
Suntrust and Wells will do checks like this all over the place, any branch I go to anywhere I go. BofA absolutly won't.