Tampa Tribune “The Rubble Of Foreclosures Is Business For Some “
The Rubble Of Foreclosures Is Business For Some
By JEROME R. STOCKFISCH
The Tampa Tribune
Published: June 30, 2008
ST. PETERSBURG – Chad Berry has plenty to be distressed about as he and his crew clear out the remains of one family’s life in the once-stately Bay Vista home.
There is the matter of how to remove several heavy, armoire-size steel safes the evicted family left behind. There are the nine vintage arcade games, including Ms. Pac-Man and Asteroids, posing a cumbersome and heavy load.
But it isn’t the back-breaking volume of abandoned furniture that is troubling Berry on a recent weekday morning. It isn’t the stench from the food that had been removed from the refrigerator and left to rot in the kitchen sink, accompanied by buzzing flies and a mouse carcass. It isn’t the dog feces dotting the floors.
It is up the grand staircase in a small bedroom where Berry, a father of two young girls, appears out of sorts.
“That’s the only thing that ever bothers me,” says the owner of Gulf Coast Grounds Maintenance. “You see a little girl’s stuff. You know how much care and joy went into that bookshelf, into making that little manger scene. You know how they rearrange it. It gets to you, man. It bugs you.
“See that bookcase?” he says, gesturing to shelves lined with the toys, books and knickknacks that a young girl was forced to abandon. “It’s just, … I don’t like that.”
Berry holds one of several critical roles in the process of taking possession of and reselling homes lost because the owner couldn’t meet the monthly mortgage payment.
Florida is second in the nation in foreclosure filings. It can be a grim job to turn those suddenly vacant houses around and restore the housing market to some sense of equilibrium. But there can be no denying that the misery of foreclosure has also provided opportunity.
From lenders to field service companies to real estate agents to sheriff’s deputies who make it happen, there is acknowledgment that the foreclosure process is unfortunate yet necessary. There is unanimous consent: Nobody wants to foreclose on a home and evict the homeowner.
“It’s the last thing you want to do,” says Ron Tremblay, a senior vice president for Wachovia responsible for the bank’s repossessed real estate portfolio. “It’s the last piece of a very painful process. It’s painful for the property owner, painful for the bank, painful for the neighbors, for the community, for all of that. My role, as I view it, is to put the money back into circulation as quickly and efficiently as I can for the bank, and do it in a conscientious manner.”
Tremblay runs a Wachovia division fairly rare in the banking industry, an in-house program to rehabilitate and re-list homes to sell them to an owner-occupier. Most lenders outsource the chore.
When a bank takes possession of a home, it becomes “real estate owned,” or REO. In the past, those homes were typically marketed to handymen or investors who could pick them up inexpensively and turn sweat equity into rental income or maybe even a lucrative sale. The goal for lenders was to quickly get the real estate off their books.
But the process is changing as the housing crisis and the foreclosure spike spread beyond the low-income arena.
Subprime loans, mortgages with tricky terms, no-money-down packages, and more traditional factors such as rising unemployment have victimized people across the economic spectrum.
Returning homes to mint condition and targeting an audience of family owners and occupiers is a trend that has developed in recent years, says Robert Klein, chief executive of Safeguard Properties, the nation’s largest mortgage field services company.
“You used to put signs out that would say ‘REO Foreclosure,’ hinting, ‘Hey, come on in and get a bargain on me,'” Klein says. “We’re now well aware that the answer is not simply to sell to a flipper. You sell to a flipper right now, and in three years it’s right back where it was.”
The Bad With The Good
This month in Apollo Beach, Wachovia staffers Drew Niswonger and Scott Daal begin a tour of their bank’s REO properties in the Tampa Bay area with a stop at a $600,000 home in the Andalucia subdivision.
Niswonger and Daal are supervising Wachovia’s strategy of improving the foreclosed homes to what Tremblay called above-average condition – “so that when you walk into it, it doesn’t look or feel like an REO.”
It’s a hands-on approach. Daal, vice president and regional team leader for Wachovia’s REO division, traveled to the Bay area from Morristown, N.J. Niswonger, sales manager for the region, crossed the state from Daytona Beach.
“You can’t do this from behind a desk,” Daal says.
A lender looking to bring a house back to ship-shape might spend $5,000; if major appliances are involved, the tab can rise to $10,000.
The pair conclude that the Andalucia home is coming along nicely. It is being painted in colors specified by Wachovia. New stainless steel appliances have been installed, with new carpeting on the way. Utilities are on, and the air conditioning is running.
“This one’ll go quick,” Niswonger says.
Their next stop is a $295,000 home in the Rosedale subdivision in Bradenton. Contractors scurry about the home, where one of the residents has left behind an affirmation scrawled in green crayon on the white living-room wall: “Giggles ‘n’ Squirmy,” it reads, surrounded by an orange heart.
The Wachovia staff take note of a missing exterior light fixture. Daal halts a painter who isn’t using the specified color for an interior wall.
“This one will clean up well,” Daal says. “We want to show it like it was a new house.”
That would not be the case in the Bond neighborhood of St. Petersburg, where the two pay a visit to a home to which Wachovia recently took title.
“What’s the adage?” Daal wonders aloud. “One man’s junk is another man’s treasure?”
The house, which may have been a three-unit rental – or may have been converted illegally from single-family home to rental units – is littered with debris and the evicted tenants’ former belongings.
With the utilities long since cut off, the thick odors of cigarette smoke and an unflushed toilet hang in stagnant air. A television and various stereo components have been left behind, along with furniture, dirty dishes and food. Mattresses are scattered throughout the units, and there is evidence of rodents.
“This is a tough one,” Daal acknowledges after touring the property. “I think we have a lot more to learn before we make a decision on where we’re going to go with it, who our buyer is, what its value is. The more I look at it, the tougher it looks.”
Indeed, the Wachovia staffers later determine it would take too much work to bring the St. Petersburg dwelling up to the bank’s standards to resell it to an owner-occupying family. It will be cleaned up and sold as-is to an investor.
But there is better news at the higher-end properties. Within three weeks, the Bradenton house is sold, and an offer on the Apollo Beach house is being entertained.
Where Business Is Booming
The region’s real estate market has been among the hardest-hit in the nation. The Tampa-St. Petersburg-Clearwater area had 4,773 foreclosure filings in May alone, or one in every 271 households. That was up 15 percent from April and 29 percent from the same month last year.
Nationally, the foreclosure rate is one in 483 households.
Along with the construction of homes, the foreclosure spike is contributing to a housing glut that has depressed prices. The median sales price in the area was $176,100 in May, down 16 percent from $209,300 a year earlier.
The Greater Tampa Association of Realtors says there is a 15-month inventory of homes on the market in this area, compared with one to two months in 2004-05.
One key to a housing turnaround would involve removing a big chunk of the 19,800 listings on the local market.
Economists report that new housing starts are down, which can bring alarming headlines but is good news for the bloated Bay area market. A reduction in the number of foreclosed homes on the market would also provide a shot in the arm.
That’s where companies such as Safeguard come in. The company, based near Cleveland, expects to serve 660,000 maintenance contracts nationwide this year, up from 173,000 five years ago.
The local market for Berry’s services is also red-hot. “Business is incredible,” said the head of the St. Petersburg maintenance firm. “I’ve been in it since 1989, and I’ve never seen a market like this.”
Like Safeguard and the other big national mortgage service companies, Berry performs most of the duties a lender requires to get a house in shape to be resold. He will make house visits or perform drive-by surveillance of homes in default, to report to the lender whether they are still occupied. He will enter an abandoned house and change locks. He does the “trash-outs” such as the project at the south St. Petersburg house. He has contracts for maintenance of 120 lawns of homes that have been foreclosed or are in pre-foreclosure. He has been on site with deputies during those ugly moments when families are forced to depart.
“There are some, when I walk in, the kids have done this before. You can just tell,” he says. “They know what’s going on, they know who you are, what you’re there for, they just gather up what’s important to them and take it. They’ll throw down a bedsheet, put the stuff in there, and you’re like, ‘That’s a kid. How does this kid know?’
“The kid has no emotion at all. They’re just kind of like, ‘Oh, that’s how people live.’ I’m like, ‘Oh, my gosh.’ That’s so nasty.”
But Berry is also aware of the magnitude of his role.
“If I wasn’t here … and nobody did this, the banks would become illiquid,” he said. “They wouldn’t be able to sell the property. They’d be gone.”
Treasures To Trash
As he is sifting through others’ misfortune, Berry says he often wonders about the circumstances. “There’s just no telling where they are, what happened to them,” he says at the south St. Petersburg home.
Sometimes, there are clues. On this day, he finds family portraits and snapshots that aren’t defaced or torn up, “so they’re not totally pissed at each other,” he concludes. He has seen otherwise.
The material scattered around the house doesn’t seem as if it should be destined for the trash pile.
A box of basketball and baseball trophies. Comic books, SpongeBob SquarePants toys and books. A large white envelope addressed to “Dad.” Ear buds, a Harry Potter collection, a math textbook.
A late-model pickup, destined to be impounded. An exercise bench. A wetsuit. Outside, in a pile of debris, a sonogram photo of an unborn baby.
Days later, the scene is repeated at a Town ‘N Country home recently vacated due to foreclosure. Mark Pace of Tampa Suncoast Realty has been contracted by the lender to turn it around.
As an REO specialist, the bulk of Pace’s work traditionally took place in low-income neighborhoods. But no more, he says. “High-end. Low-end. It’s a little bit of everything,” Pace says. “No neighborhoods are exempt from this.”
Hillsborough County sheriff’s Deputy G. Hammond knocks and gently pushes open the front door. “Sheriff’s office!” he shouts.
It is clear the home has been abandoned. The deputy returns to the front walkway after a brief tour to ensure no one is on the premises.
“Who wants to sign?” he asks.
Pace puts his signature on a sheet headed “Notice: Writ of Possession Executed,” and Hammond tapes it to the door next to an older posting, “Final Notice of Eviction/Execution.”
Pace and an assistant start hauling abandoned property to the curb.
And in an area with 15 months’ worth of homes on the market, another one is up for sale.
Reporter Jerome R. Stockfisch can be reached at (813) 259-8402 or firstname.lastname@example.org.