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Cleaning Up Foreclosed Homes After the Mortgage Crisis

Junk haulers expand their business in the wake of evictees leaving behind houses in terrible condition

By Paul Knight 

Victor Correa approached the abandoned house with caution.

The lawn was overgrown, and various pieces of junk — a broken charcoal grill and rusted push lawnmower included — littered the backyard.

A mortgage lender hired Correa, 25, to clean the foreclosed home. Other than the address, Correa had little information.

He opened the back door, and the smell of rotting food and garbage pushed up his nostrils and down his throat. Correa rushed outside and vomited.

Garbage covered the floor, inches deep in some areas. The bathrooms, with a thin layer of crust on the toilets and sink, looked as if they hadn't been cleaned in months. Furniture remained in each room.

"That's the kind of job you want to turn around and leave," Correa says. "But I didn't."

Correa drove to a hardware store and bought boxes of garbage bags, bottles of disinfectant, latex gloves, face masks and anything he could find to protect his body.

He returned to the house, suiting up in a makeshift hazmat uniform. He walked through the rooms, taking pictures with his digital camera. Eventually he brought over a couple more guys to help with the job.

Neighbors told him the story of the house. The owners had been an older man and his wife. Their two children had lived there a few years earlier. After his wife died, the man hadn't been seen much.

The neighbors weren't exactly sure when he left, but, they said, the property had been vacant for some time.

Correa told the neighbors the house had been foreclosed, and he was a foreclosure cleaner. The house, Correa says, was the worst he has seen.

The crew worked for nearly three days to get the house empty, hauling load after load of garbage and junk to the dump. When the house was "broom swept" clean, Correa spread some disinfectant on the carpets and linoleum floors. He snapped another series of pictures to send to the bank, and later collected about $2,000 for the job.

"The thing about foreclosures is that there is so much work out there," Correa says. "It's a loss for a lot of people, but it all depends on how you look at the ­situation."

Correa is one of the many local laborers cashing in on the growing number of foreclosed properties in the area. Some homes are left in good condition. Others are full of whatever the owners couldn't take with them.

Larger and more established "field asset" firms are overworked in areas of the country with booming foreclosure rates. Houston lenders — desperate to get the properties ready for resale — are turning to small-time junk haulers to clean the messes left behind.
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The foreclosure surge hit Houston in 2006, as it did most areas of the country. Nationwide, home buyers defaulted on their mortgages at a rapid pace. The blame has been placed largely on subprime mortgages available for borrowers who wouldn't qualify for traditional home loans.

Those exotic loan products — mortgages with interest-only payments or adjustable rates — were available from a number of lenders in Houston, but never drove the housing market as they did in the nation's foreclosure hotspots. In California, Michigan and Nevada, neighborhoods that once thrived with new home development have turned vacant.

Houston doesn't match the hardest-hit areas of the country, but in the last few months it has seen more and more deserted properties.

"Most companies that do what we do have more [business] than they want," says Cheryl Lang. Lang owns Houston-based Integrated Mortgage Solutions, a national company specializing in reconditioning foreclosed properties.

Lang took over the business in 2001, when the firm's niche was filing insurance claims for government foreclosures. The company soon started handling the cleaning, repairs and other upkeep necessary to prepare properties for resale.

"This is all helping us," Lang says. "I never thought I'd be a bottom feeder, but here I am."

Before, Lang could predict the amount of work the company would handle from month to month. She had a short client list of lenders dealing with a minimal number of foreclosures. That pace has changed.

"I get calls from investors, I get calls from realtors, I get calls from lenders. People I never would have thought were my target market are now coming out of the woodwork," Lang says. "It's just nuts all over."

Work in Houston has been minimal for Lang's firm, mainly because the company has focused on areas outside of Texas. But Houston foreclosures are on the rise. In fact, April was the worst month the area has seen in recent years, with 1,096 foreclosures. That's almost 200 more than the same month last year.

Houston's 77449 ZIP code, on the northwest side, made the top 100 in the nation for 2007. The area saw rapid growth in the early part of the decade, with retail strip centers and a sea of new homes popping up almost overnight.

"They started developing that area really aggressively," says Erion Shehaj, a Houston realtor who specializes in foreclosed homes. "Like clockwork...[foreclosures] have been popping up one after another, because they were pushing them to people that couldn't really afford them in the first place."

Large signs are now planted along the roadside, advertising housing deals such as "Inventory Clearance!" and "Closeout Specials."

One subdivision in the area that was hit particularly hard is Bear Creek Meadows. The neighborhood was developed about five years ago, with houses priced in the $120,000 range and marketed to first-time buyers.

There's little variation in the construction, apart from the color of the brick. Most homes are lined with khaki-colored siding. On almost every street, with names such as River Bottom Road and Cannon Fire Drive, properties are now vacant.

Bear Creek Meadows has also suffered because developers sold packages of homes to buyers who planned to rent out the properties.

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