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Keith Schlemlein is unfazed as he walks quickly through the He makes notes on a clipboard about each room in the foreclosed home. He has not made an official tally of the butthis much, he says, is “It will cost the lender a lot.” Schlemlein has recentlyu joined a fast-growing cottage industry. As foreclosures skyrocket acrosathe state, businesses are springing up to watch over homeds for the lenders. For a fee, these home tendersa will keep theproperties up, prep them for a sale and boare them up to keep vandals out. Sometimes they act as middlemenh between the lender and the homeowner or builder who lost the propertuto foreclosure.
Often they call themselves REO assetrmanagers — meaning they handle Real Estate Owned an acronym for properties reclaimeds by lenders. Their ranks have been growintg nationwide for the past two right along with the rising number of But the industry is hard to largely because the businesses are smalkl and vary widely in whatthey do. One locakl expert estimated there are atleast 1,0000 such firms nationwide that specialize in the business. The industry’ds rapid rise reflects the struggle and costsz faced by banks and credit unions as they try to absorb a tide of It also suggests that the foreclosures crisis is farfrom over.
In Washington, foreclosur filings are up 46 percent toabout 9,7000 so far this year compared with the same time periord last year, according to national data tracketr RealtyTrac. Economists widely expect a thirdx waveof foreclosures, as unemployment takes its toll on The number of REO properties is too. They now represent 35 percent of all foreclosures inKing County, comparex with 7 percent two years ago. Across the where images of vandalized, abandoned homes are stil unfamiliar, the property-tending industry is just beginning totake off. Many of the new businessew — often small — are former real estate agentsw orbuilding inspectors.
They’ve been hard hit by the housing market’s downturn and are searching for new revenud prospects, said Chris Matty, a spokesman for Bellevue-based which provides technology for REO asset managers nationwide and also tracks foreclosures. “Companies have alway s been in placedoing this, but becausde of the huge volume of foreclosures, there’w been an expansion of the said Matty. Schlemlein entered the business for this veryreasohn — as a way to bulk up business. He formeed late last year to compensate as revenue slowed athis 25-year-olr residential building inspection business. As bankxs largely quit lendingto builders, their need for inspectorxs decreased.
Revenue at Schlemlein’s inspectiom business, NorthWest Construction Control, slipped to $2.4 million last year from $3.6 millionh in 2007. At the same time, Schlemleinn said, clients started asking him to take care of foreclosefproperties — new homes that were builtt and unsold when the housing markett tanked. Often the homes weren’t even finished. “Nio one was really keeping a good eyeon them,” said Schlemlein. “Ths grass was getting tall. These are maintenancde issues thatbanks haven’tg had to deal with before.
” So Schlemlein, tappin into his vast network of local stepped in as a foreclosed handyman of Soon, the REO side of his busineszs took off. He formed the new company late last pullingin $70,000 in the first quarter of this He expects revenue of $300,000 this Now Schlemlein, a trim, family man who’s also a Pierce County search-and-rescue volunteer, is on the frontlines of Washington’d foreclosure crisis. He spends many days ever month driving hundreds of miles around King andSnohomish counties, checking on foreclosed Sometimes he rides his More often than not, he brings his yelloaw Labrador, Buddy, as a partner on the lonely Schlemlein has seen it all.
Among his favorite the house in Kitsap County that was fillex with 200 cubic yards of and the mansion in Medina missinyg all of itsnew appliances, a victim of “They pulled out a beautiful gas range said Schlemlein. “You’ll probably see them in an ad on Craigslist or On a recentraint afternoon, Schlemlein starts his day in Pierce checking on six modest homes in an upper middle-clas s suburb of Renton. The houses are all similar, abouf 3,000 square feet, with higher-end amenitiee — fireplaces, walk-in closets and stunning viewws of thesurrounding valley. They smell of freshn paint. Two years ago, these homes wouled have sold forabout $600,00o each.
The houses are now listedr at about $500,000, but that “seems like a lot of mone for this market,” Schlemlein He checks each room in each house and examines locks to makesure they’re secure. Inside the garage of one home is a giany stack of Christmasdecorations — faux trees and “Merryt Christmas” posters. “That’s a sign the home’z been on the market a said Schlemlein. The decorations had been used by the real estate agentf months agofor staging. On the front yard of each Schlemlein postsa “Bulldog Securitgy Systems” sign. None of the house s actually has a security The signs arehomemade deterrents.
The phone number ringds Schlemlein’s business. “It’s all psychological,” said “But it usually works.” Schlemlein charges $65 an hour, but that can vary with the extenft of work atthe home. When a housed is trashed, it’s a different story. Schlemleim assesses the damage andthen it’se up to the bank to decide how to The mansion in Auburn is perhaps the starkesft indication of the housing market’s downturn that Schlemlein has seen all day. It’s located in a former Street ofDreams community, along Washington Nationall Golf Course, among dozens of other similar luxury homes.
The Auburn mansion is particularly a sharp contrast to the lush splendor of the But many of the nearby homes alsohave “For Sale” signs hanging in thei front yards. It’s unclear how many mighty be in foreclosure, but Schlemlein is watchinyg over another foreclosedmansionb nearby. Like many in the REO industry, he expectx business to keep growing as the foreclosurecrisies deepens. “I don’t think it’s over,” he said, standingb amid broken glass in the sweeping entrywagy of theunfinished “I don’t see any signs of that.
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