Crain’s Cleveland Business Story About Safeguard
It’s a dirty job …
In wake of foreclosure mess, the business of maintaining abandoned homes booms
By ARIELLE KASS
4:30 am, September 15, 2008
Paul Carlozzi is a former Marine, a man with tattoos, a quick smile and piercing blue eyes.
Still, he can’t help but shake his head at what he sees people doing to the homes they once lived in, and to their neighbors.
Everywhere, windows are broken. Doors are ripped from their hinges. Aluminum siding and downspouts have been removed. So has copper piping.
Mr. Carlozzi, a field quality control supervisor with Safeguard Properties, said none of that is unusual. But as more homes enter foreclosure, he’s struck by how often people trash their houses on the way out, and by the prevalence of thieves.
“That’s a shame,” he says at one East Cleveland home, ready to be shown to potential buyers until someone broke a basement window and removed copper pipe. “We had the property ready to be occupied.”
Safeguard, based in Brooklyn Heights, is the country’s largest home preservation company. Working with mortgage companies and contractors nationwide, the 550-employee company inspects homes where the owner is behind on mortgage payments to make sure the houses are still occupied. They board up smashed windows at homes that have been abandoned and lock the doors. They fix broken stairs and railings, remove shattered glass, replace stolen fixtures and mow the lawns. They empty the houses of any possessions families have left behind.
With foreclosures coming at a steady pace, business has been booming. Safeguard CEO Robert Klein said the company was doing 450,000 inspections a month two years ago, before the housing crisis hit full force. Last month, that number was 780,000.
“In the last eight months, there’s been an absolute explosion, a tremendous, tremendous increase,” Mr. Klein said. “I truly don’t know when it’s going to stop.”
Safeguard often goes to a home more than once a month to keep it safe and secure. The company, after seeing more vandalism, starts distributing door hangers to neighbors, asking that they call Safeguard if they see suspicious activity at an empty home. New boards will be painted to look like windows, in the hope that people simply driving down the street won’t notice that houses are unoccupied.
Most properties Safeguard deals with don’t reach that point, company spokeswoman Diane Roman Fusco said. Between 80% and 90% of the homeowners that go into default work out their issues and are able to save their homes. But it’s on the rest that Safeguard spends the most energy, winterizing pipes, removing bug infestations and cleaning out flooded basements.
Sometimes, Mr. Carlozzi said, abandoned houses look like their owners just left for work. Other times, said Ms. Fusco, the former occupants’ frustration is taken out on the floors and walls.
“It’s happening more. They’re causing thousands of dollars worth of damage,” she said.
Flooding and mice feces
Whenever Mr. Carlozzi enters a house, he is cautious. He checks to make sure the door is still locked, glances around for windows that are broken. He shouts, “Contractor! Anybody in here?” as he opens a door, letting anyone who may be squatting there know that he isn’t a police officer.
At a house on Westropp Avenue in Cleveland, the back door has been removed. A fan is in pieces on the floor and all precious metal has been stripped from the house. In the basement, there is a foot-deep pool of standing water. There are mice feces scattered throughout the house.
“This is the typical debris you find,” Mr. Carlozzi said. “Our goal is to not let the condition deteriorate. We want to maintain its value.”
Before the housing crisis struck, houses that had been foreclosed upon sold pretty quickly, Ms. Fusco said. Now, those homes are competing with others that are in better shape, that don’t have neighbors with boarded-up windows. That glut leads to longer sales times and more visits from Safeguard.
Mr. Klein said the mortgage companies that are his clients want to protect the properties. The companies have requested more information about code enforcement officers in particular areas, asking them to continue checking up on homes that have been abandoned. And a vacant property registry is being established, so those officers will know who to contact when there’s a problem at a house.
It’s particularly hard, Mr. Klein said, to watch as Cleveland is ravaged by the deluge of foreclosures. After all, his family lives here, too.
Still, his company is prospering. Business is projected to rise by about 30% in 2008, double the amount the company normally sees each year, and Safeguard is moving from a 33,000-square-foot building in Brooklyn Heights into one in Valley View that’s more than twice the size. The company is exploring offering other services that would allow it to grow, even after the housing market stabilizes.
While Mr. Klein said there always will be a need for Safeguard’s business, he doesn’t take any pleasure from the reason for the increase. Now, Safeguard must struggle to keep enough contractors, who do the home inspections and repair work, trained to its standards.
“Every one of our projections was blown out of the water. We’re in a crisis mode. We’re grappling,” Mr. Klein said in discussing the company’s manpower needs. “Everyone’s still trying to get a handle on it.”