Housing Bust Leads To Cleanup Boom

Businesses That Maintain Foreclosed Homes Take Advantage Of Mortgage Mess

(AP)  Several men wordlessly carry out furniture, broken computers and boxes of garbage from a large blue house on a quiet upstate street on a brisk autumn morning. Rusting bikes and an old grill lay discarded in the overgrown backyard which is spotted with empty beer cans and crushed milk cartons. The mood is oddly serene as the men unload the remnants of what was one someone's home.

Todd Drake, manager of Empire Real Estate Management in Latham, is overseeing yet another eviction. The home's former owner has long gone, leaving just debris and an old phone number in his stead. After a county sheriff's deputy checks to make sure no one is inside, crews head in to change the locks and clean out the refuse - also known as a "trashout." Drake is stoic as he watches his crew.

"These evictions are the last resort," he explained. "I'm not here to judge that - the circumstances or the lifestyle."

The nation's housing bust and economic downfalls have greatly increased the number of homes being foreclosed and taken by banks. The bank typically hires a real estate agent to resell it, but someone has to come in and clean up after the last residents. That's led to a boom in a new type of startup business - cleaning up foreclosures, also known as "real-estate owned" or REOs.

Web sites aimed at wannabe entrepreneurs - like www.explorestartups.com - frequently suggest starting up a foreclosure cleanup business as moneymaker. Entrepreneur Magazine even picked a foreclosure cleanup business called Cyprexx for its 2008 "Hot 100 Fastest Growing Businesses" list.

Real estate firms have also taken on this side of the business, handling eviction lockout and property management services such as repairs and cleaning out the houses. Sometimes the firms contract another service to do the messy work, but others, like Drake's firm, do it all.

"It's just becoming a way of life. It's sad. we try not to have too many opinions out on the field to be honest," said Linda Hall of All REO Preservation in Riverside, Calif. "You kind of have to (stay detached from it), you can't think about the circumstances of it."

On the street where's Drake's crew was cleaning up, neighbors said they weren't too worried about whether the foreclosure would hurt their home values.

"I think they just got into trouble financially," said William Trackey, who lives across the street. He said there was a man, his girlfriend and a couple of children living there.

"It's a nice neighborhood and I've lived here for a long time," said Trackey, who says foreclosed homes are a rarity in this neighborhood of primarily owner-occupied homes. "You don't often even see many homes for sale on the street."

According to the Mortgage Bankers Association, over 4 million homeowners were at least one month behind on their loans at the end of June according to the latest statistics, and almost 500,000 had started the foreclosure process. An estimated 2.8 million U.S. households will face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value by the end of next year, predicts Moody's Economy.com.

When a deal can't be negotiated, an eviction may have to be obtained from the courts. In those cases, the county sheriff delivers the eviction lockout notice and peaceably reviews the situation.

It's not as common for the occupant to stay full-term after the foreclosure, but it does happen, Drake said. In one case, his crew found the resident still inside, armed and refusing to leave. Fortunately, he said, police were able to safely resolve that situation. Companies like Drake's usually try to the "cash-for-keys strategy" first, in which a homeowner facing foreclosure is offered a small sum, usually between $1,000 and $3,000, in exchange for a clean, quick departure and handing over the keys.

Hall was working in the bookkeeping business in 2007 when a client got her then-boyfriend involved with foreclosure cleanup. In February, she launched her own business, All REO Preservation.

"We've been butt-kicking busy," said Hall. "I work in the field as much as I work in the office."

So busy that Hall's even working on putting together a nationwide plan to give work to other contractors, and currently has crews and subcontractors in several other states. Her business also offers its own training program for startups.

"Some of the homes are in pretty good shape and it's just a matter of changing the locks, cutting the grass, etc.," said Hall. "If it's a big, heavy trashout, those homes have either never been maintained or people are angry when they move out and do a little damage."

As foreclosure rates have risen, so too have the number of trashouts. While people typically take their valuables when the move out, sometimes they'll leave things behind like photographs and kids' pictures, and even family pets. Hall said she recently found two dogs that had been left behind when their owners left, a boxer and a pit bull puppy.

Many occupants even take the copper piping out of the house when they leave, while other people actually scout out the vacated homes to steal the copper piping. The troubled economy has led to rise in copper and scrap metal theft - prices for which have increased in the past few years.

While there are no statistics tracking copper thefts from vacated homes, real estate agents, contractors and police departments around the country are reporting a significant rise in these thefts; police in some counties report a 100 percent increase in the number of copper thefts from 2007. That causes more headaches for those who have to clean, repair and sell the houses.

"There's a real correlation between the state of the economy, the foreclosure rate and copper being pulled from homes," said Boston-area real estate broker Marc Charney. "We're seeing somewhere in the neighborhood of 50-60 percent of the houses we have (getting stripped), some during the acquiring process."

"We put (the house) on the market, we might even find a buyer for it, and then somewhere between them buying it and us needing to close, people will break in and steal all the copper," said Charney. "If the lender for the new buyer finds out, that's a problem. It messes up the whole process."

As for the stuff that's left behind, most counties require all personal property to be put in storage for 30 days to give the previous owner a chance to reclaim it. Most of the time, they don't.

"Every house and situation is different," said Hall. "Every circumstance for people losing their house is different too. Sometimes you see medical equipment left behind and you sometimes can assume they lost someone and just couldn't keep up with the medical bills."

[standlee5]

Biggest takers from Fannie and Freddie, Christopher Dodd and John Kerry, both D''''s.
Posted by DeckardBR at 02:17 AM : Nov 28, 2008

I thought it was Chris Dodd and Barney Frank. McCain tried to sound the Fannie and Freddie alarm but hey who listens to reason when you can buy votes. And obama of course he was mum on the subject he''d have voted present anyway on any bill.

[downtowner97]

In the last Obama/McCain debate, it looked like they were competing to see who could look more like a socialist. McCain won that contest by saying he''d have the government take over all the failed mortgages.

[downtowner97]

Ok. That accounts for Fannie and Freddie, but what about Silver State Savings and Loan in Nevada, whose chief auditor was John McCain''s son, and Washington Mutual, Citibank, Countrywide and all the others?

[deckardbr]

if I had a dollar, I''''d bet you the CEO''''s of the mortgage companies who made the subprime loans that led to all these foreclosures not only voted Republican, but contributed heavily to the Republican Party during this campaign.
Posted by downtowner97 at 01:46 AM : Nov 28, 2008

Biggest takers from Fannie and Freddie, Christopher Dodd and John Kerry, both D''s.

[deckardbr]

I know I am going to watch Obama real close to see if his idea of CHANGE is really change for the better, or more of the same dung handed out by the Great Emperor Bush II the past 8 years.
Posted by walt1944 at 10:32 PM : Nov 27, 2008

Check out Obama''s cabinet, I think you got your answer already.

[downtowner97]

xlib, if I had a dollar, I''d bet you the CEO''s of the mortgage companies who made the subprime loans that led to all these foreclosures not only voted Republican, but contributed heavily to the Republican Party during this campaign.

[downtowner97]

Bush''s apologists make my point so well. He isn''t responsible. He isn''t in charge. He doesn''t have to try to do anything. He sits there and champions freedom and democracy and godliness just by his existence. Hell, he''s so wonderful he doesn''t even NEED to do anything.

[deckardbr]

"someone has to come in and clean up after the last residents."

No different than the White House or Kennedy compound; somebody''s always cleaning up after them too.

[walt1944-2009]

As far as I am concerned BOTH Republicans and Democrats are at fault with the current mess we are in.

Ronald "Bonzo" Regan with his "Trickle-down Reganomics" which never trickled down but UP, The Great Emperor Bush I with his living in denial of any bad news happening on his watch and dreaming up "FREE TRADE" and NAFTA, "Wild Bill" Clinton for pushing NAFTA to get passed thru a Democratic Congress and getting the ball rolling for companies to outsource jobs, and the Great Emperor Bush II who is GUILTY of ALL of the above together with a lot more including taking away most of our rights and committing crimes against humanity!

I know I am going to watch Obama real close to see if his idea of CHANGE is really change for the better, or more of the same dung handed out by the Great Emperor Bush II the past 8 years.

SIG HEIL, I''LL STILL GET A 3RD TERM YET!!!, BUSH!!!

[runningralph]

Bush didn''t cause the real estate bubble. That was caused by developers and real estate agents and gullible/speculative buyers. Freddie Mac and Fannie May pressured bankers to use liberal lending policies because of Democratic Congressmen. Anyway it''s not all that bad. As this article shows when one door closes, another opens. That''s the beauty of free enterprise. Sporting events are going strong. Traffic is so bad I had to wait 3 minutes to get across a highway yesterday. Swarms of traffic everywhere I go. Store parking lots jam packed. I made ten grand last month. Wheel and deal. Well, I don''t do that well every month, but I do OK for an old geezer. Sometimes I''m working for less than minimum wage. I keep going. Ask immigrants why they come to the US. They will tell you they come to make money. I know I''m rambling aimlessly. The point is the economy will get better and it''s not all bad now. And Bush didn''t cause it.

[standlee5]

Homeownership is more than just paying the mortgage. It''s fixing the roof when it leaks, paying a plumber for a stopped up sink or learning how to do it yourself, mowing, trimmng, painting, varnishing, water sealing the deck. Most new homeowners were over there head the minute they signed the papers and had absolutely no hope of ever being a real homeowner they were just renting the house from the bank. Banks became the new landlords and real landlords almost went broke with no renters any where. I don''t have mush sympathy for anyone in this mess except the taxpayers that know how to manage their personal finances.

[xlib]

nowaymcgoo-since we are about the same age do you realize that the dems are the ones who made a mint from sub prime loans? Do you realize that? Do a bit of research before passing judgement. As for domestic enemies do you realize that that more Wall St big wigs give money to the dems? Do you reazlize that Goldman-Sachs contributes EXCLUSIVELY to the dems? The class envy ploy is just that a ploy. Look to your party and see just who runs it.

[xlib]

And I betcha a few dems will make millions from this too. After all the very resourceful dodd and his buddies couldn''t pass up a chance to make a few bucks.
Are fannie & freddies still handing out risky loans in the name of fairness?

[legacyabq]

"Was there ever a moment in Bush''''s two terms where he WAS responsible? "

Well? Was there? Answer the question there republic..

[legacyabq]

Its true downtowner, what you say..

The GOP posters are simply delusional.. Limbaugh et al have convinced them that it is physically impossible for a republican to be wrong about ANYTHING.. You never see a humble GOP''r claiming responsibilty for anything.. It is either Pelosi''s fault, Clinton''s fault, or Obama''s fault..
Its hard to believe this was a party that once claimed an intellectual basis for their dogma.. They are seriously brainwashed clones now, much like a CULT.. It is so disturbing.. Their solution is to literally pretend nothing bad happened under Bush, that he is a hero who was "hogtied" by the "left".

It is sad to see so many people so very stupid.

[downtowner97]

People who have continued to support Bush say he is not responsible for the state of this country. They spent the first 8 years since his election blaming Clinton. Now that Obama''s been elected, they say it''s all Obama''s problem. Was there ever a moment in Bush''s two terms where he WAS responsible?

Thieves and liars have gotten rich, and hard working people have lost their homes. This is WRONG!

[bjcone8559]

This is the saddest state of affairs I have seen in my 60 years. People are giving up. What has happened to our country? This can never happen again, we must protect and defend our nation against all enemies... foreign and domestic. This is the result of allowing America to be pillaged by domestic enemies. No more neocons!! No more ''trickle-down''!! Presecute the Bdush/Cheney crime cartel!!