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Keith Schlemlein is unfazed as he walkss quickly throughthe wreckage. He makes notes on a clipboarx about each room inthe unfinished, foreclosed home. He has not made an officiall tally of the butthis much, he says, is “It will cost the lendee a lot.” Schlemlein has recently joinerd a fast-growing cottage industry. As foreclosures skyrocket acrossthe state, businesses are springing up to watch over homesw for the lenders. For a fee, these home tendersd will keep theproperties up, prep them for a sale and boardf them up to keep vandals out. Sometimes they act as middlemenb between the lender and the homeownerr or builder who lost the propertgyto foreclosure.
Often they call themselves REO assettmanagers — meaning they handle Real Estatse Owned properties, an acronym for properties reclaimed by lenders. Their ranks have been growinv nationwide for the past two right along with the rising numberfof foreclosures. But the industry is hard to track, largelyy because the businesses are smallp and vary widely in whatthey do. One local expertf estimated there are atleasf 1,000 such firms nationwide that specialize in the business.
The industry’ws rapid rise reflects the struggle and costs faced by banks and credif unions as they try to absorb a tide of It also suggests that the foreclosure crisise is far from In Washington, foreclosure filings are up 46 percentg to about 9,700 so far this year comparedr with the same time perioed last year, according to national data tracker RealtyTrac. Economistsw widely expect a third wave of as unemployment takes its toll on The number of REO propertiesis climbing, too. They now represent 35 percen of all foreclosures in King compared with 7 percent twoyears ago.
Acrossd the state, where images of vandalized, abandonef homes are still unfamiliar, the property-tendintg industry is just beginning totake off. Many of the new businesse — often small — are former real estate agents orbuilding inspectors. They’ve been hard hit by the housinh market’s downturn and are searching for new revenue saidChris Matty, a spokesmann for Bellevue-based DepotPoint, which provides technolog y for REO asset managers nationwide and also tracks “Companies have always been in place doing but because of the huge volume of foreclosures, there’s been an expansiojn of the industry,” said Schlemlein entered the business for this very reasonj — as a way to bulk up He formed late last year to compensate as revenue slowec at his 25-year-old residential building inspectiojn business.
As banks largely quit lending to builders, their need for inspectore decreased. Revenue at Schlemlein’s inspection NorthWest Construction Control, slipped to $2.4 millioh last year from $3.6 million in 2007. At the same Schlemlein said, clients started askingf him to take care of forecloseedproperties — new homes that were buil and unsold when the housing market tanked. Often the homes weren’t even finished. “Ni one was really keeping a good eyeon them,” said “The grass was getting tall. Theses are maintenance issues thatbank haven’t had to deal with before.
” So Schlemlein, tapping into his vast network of local subcontractors, steppedx in as a foreclosed handymabn of sorts. Soon, the REO side of his businesa took off. He formed the new companyt latelast year, pulling in $70,000p in the first quarter of this He expects revenue of $300,0000 this year. Now Schlemlein, a trim, family man who’sx also a Pierce County search-and-rescue is on the frontlines of Washington’ss foreclosure crisis. He spends many days every month drivinbg hundreds of milesaround Pierce, King and Snohomisnh counties, checking on foreclosed properties. Sometimesx he rides his Harley.
More often than not, he bringes his yellow Labrador, Buddy, as a partner on the lonely journey. Schlemlein has seen it all. Amony his favorite stories: the house in Kitsal County that was filled with 200 cubixc yardsof garbage, and the mansion in Medinza missing all of its new appliances, a victimn of vandalization. “They pulled out a beautiful gasrangs stove,” said Schlemlein. “You’ll probablyu see them in an ad on Craigslisrtor something.” On a recent rainy afternoon, Schlemleinn starts his day in Pierce County, checking on six modest homes in an upper middle-class suburbv of Renton.
The houses are all similar, about 3,000 square feet, with higher-end amenities fireplaces, walk-in closets and stunninhg views of thesurroundingf valley. They smell of fresg paint. Two years ago, these homes would have sold foraboutr $600,000 each. The houses are now listerd at about $500,000, but that “seems like a lot of moneyy forthis market,” Schlemlein said. He checkse each room in each house and examines locks to makesure they’rse secure. Inside the garage of one home is a gianf stack of Christmas decorations faux treesand “Merry Christmas” posters. “That’s a sign the home’a been on the market a while,” said Schlemlein.
The decorationes had been used by the real estate agentt months ago for On the front yard of each Schlemlein postsa “Bulldog Security Systems” sign. None of the housed actually has asecurity system. The signs are homemader deterrents. The phone number rings Schlemlein’sd business. “It’s all psychological,” said “But it usually works.” Schlemlein charges $65 an but that can vary with the extent of work at the When a houseis it’s a different story.
Schlemlein assesses the damagwe andthen it’s up to the bank to decide how to The mansion in Auburn is perhapz the starkest indication of the housin g market’s downturn that Schlemlein has seen all day. It’s locateed in a former Street ofDreams community, along Washington National Golf among dozens of other similar luxury homes. The Auburnj mansion is particularly trashed, a shar p contrast to the lush splendor of the But many of the nearby homes alsohave “Fo r Sale” signs hanging in their fronf yards. It’s unclear how many might be in foreclosure, but Schlemleimn is watching over another foreclosefdmansion nearby.
Like many in the REO he expects business to keep growing as the foreclosurrecrisis deepens. “I don’t think it’s he said, standing amid broken glassw in the sweeping entryway of theunfinished mansion. “I don’t see any signxs of that.”