As The Mortgage-Lending Crisis Spreads, Business Is Booming Firms Specializing In ‘Property Preservation.’
WSJ:
Three weeks ago, 50-year-old Mimi Norris strapped on black steel-toe boots, packed a face mask and a digital camera in her bag, and headed to work. Her assignment: inspecting a foreclosed home in a blue-collar neighborhood of Akron, Ohio.
From outside, the small white house appeared to be in good condition, but as Ms. Norris unlocked the door, she braced for what might lie inside. At worst, squatters or drug dealers she’d have to sweet-talk her way around, or mold so thick her throat would close up. At best, she’d probably find debris and tattered possessions, a snapshot of despair faced by the vacating homeowners. Her job would be to capture it all on camera and make repair recommendations to the lender now in possession of the property. Then the lender might hire her firm to arrange the fixes.“You don’t know what you’ll find until you step foot inside,” says Ms. Norris whose firm JR Services LLC in Norton, Ohio, services foreclosed houses across Ohio.
As the mortgage-lending crisis spreads, business is booming among small mortgage field-servicing firms such as JR Services, which specialize among other things in “property preservation.” Driving the trend: the national homeowner-vacancy rate, which measures how many vacant homes are for sale. That rate rose to 2.8% in the fourth quarter of 2007, matching a record set in the first quarter of last year; by some accounts, it hasn’t been this high since the Great Depression. Meantime, U.S. foreclosure filings, a prelude to vacancies, surged 75% last year to 2.2 million, according to RealtyTrac. In December alone, there were 215,749 foreclosure filings, almost double from December 2006.
Across the country, a web of handymen, contractors and inspectors like Ms. Norris are on the front lines of a battle to keep the vacated homes free from burst pipes, vandals, rot and animals until they can be resold — and to preserve the integrity and living conditions of neighborhoods. In some cases, these mortgage field servicers work for the lenders who are foreclosing on the house. In others, they act as vendors to big national middlemen who handle large volumes of foreclosures and then farm out the fix-up work to these smaller regional shops. While a large proportion of the companies, big and small, are private, some trade groups estimate mortgage servicing to be a $1 billion business with 8,000 to 10,000 active companies in operation.
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