By Nick Miroff
Washington Post Staff Writer
Tuesday, October 28, 2008
Among the many harsh lessons for mortgage lenders in the housing bust is this one about evictions: Selling a house is far easier than taking it back. Clever opportunists and struggling families have figured this out, too, and the result is a rapidly evolving free-for-all coursing through the Washington region's worst foreclosure-racked suburbs.
Defaulting homeowners are taking advantage of banking chaos to live mortgage-free for six months or longer, dragging out the eviction process, according to lenders and real estate agents. Unscrupulous landlords are collecting rent but withholding mortgage payments, leaving a rude surprise for their tenants when repossession comes. And banks are so eager to avoid the hassle of eviction that they are paying occupants $5,000 or more simply to hand over the keys and move out without a fight.
Then there are the illegal squatters, appliance thieves and miscellaneous animals -- wild and domestic -- that abound amid the disorder.
Someone has to sort out the mess, and that's where people such as John Zampino, a deputy with the Prince William County Sheriff's Office, come in. Zampino is one of hundreds of deputies across the region who increasingly function as the armed couriers of the real estate meltdown, delivering court documents, serving repossession orders and, when necessary, carrying out evictions. He estimates that he has conducted more than 100 evictions this year, up from two in 2006.
"We're never happy about kicking people out of their homes," said Zampino, 36.
But the eviction process rarely means forcing a family and its belongings to the curb. It more often happens through a quiet, gradual escalation of ominously worded documents taped to door frames or hand-delivered by deputies.
In the past two years, he has evicted renters at one property and returned to the same house a few months later to evict the landlord. But when scams and opportunism are involved, Zampino sees his job as a valuable service. "Most of the time, I feel like I'm making the neighborhood better," he said.
He is likely to remain busy. The economy has prompted many homeowners to stop paying their mortgages, telling banks that they want to negotiate a short sale, through which the bank does not foreclose but agrees to accept the proceeds of a sale of the property for less than the amount of the loan. With banks' loss-mitigation departments inundated with foreclosure cases, the process can grind on for six months or more, according to real estate agents and homeowners, and often ends in foreclosure anyway.
"I wanted to refinance but I couldn't," said Sergio Martinez, a contractor who bought a $300,000 house in Manassas Park in 2006 with no down payment and two loans, one at 14 percent interest. He has been living in his home for free since December, when he stopped making mortgage payments as construction work dried up.
Each foreclosure costs a bank $40,000 to $50,000 in attorney's fees and fees for property management and other services, according to John Mechem, a spokesman for the Mortgage Bankers Association. "Sometimes it takes two or three tries on a short sale to make it work," he said. "Lenders are willing to go to great lengths to avoid foreclosure."
Although the sheriff of Cook County, which includes Chicago, recently attracted national attention and the scorn of the lending industry by suspending foreclosure evictions, repossession continues in the Washington region at an unprecedented rate. Area jurisdictions do not have a standardized record-keeping system to track evictions, so numbers are difficult to compare, but nearly all are showing an upward trend.
The Fairfax County sheriff's department has conducted 924 evictions this year, on pace to surpass last year's mark of 1,065, while in Arlington County, the rate is relatively low but creeping up slightly. In Loudoun County, deputies served 919 repossession orders (which include all forms of property) through the first nine months of 2008, more than in any other year on record.
Evictions in Montgomery County are also on a record-breaking pace. Prince George's County has the highest foreclosure rate in the Maryland suburbs, but officials did not respond to requests for eviction data.
Then there is Prince William, which has the highest foreclosure rate in the Washington area. After serving 2,771 eviction orders from July 2006 through June 2007, the county served 3,751 from July 2007 through June 2008. More than 1,235 eviction orders have been carried out in the three months since then.
The increase has generated vast amounts of court documents and other paperwork for deputies, including Zampino, whose cruiser resembles a rolling file cabinet on some mornings. On eviction day, it's his job to go inside the foreclosed home to make sure it's empty and safe for the bank-hired cleanup crew to enter.
Often, it's a risky affair. Zampino has been attacked by an angry, orphaned pit bull (solution: Taser), nauseated by mold and cockroach nests (sanitizers for hands and boots) and confronted by such heart-rending cases as that of an elderly blind woman who had been cheated by her daughter (Zampino postponed the eviction until another relative came to her rescue).
Usually, the sheriff's department has little discretion to delay court-ordered evictions, but Zampino and other deputies try to work with shelters and charities to keep families from landing on the street.
More often, the occupants are gone by the time Zampino shows up, having bequeathed a nasty mess to the bank. At one vacant Manassas area townhouse last week, a leaking water heater had turned the living room carpet into a moldy bog. Zampino and a cleaning crew opened another townhouse nearby to find cabinets in full bloom with roaches.
Such headaches are one reason banks are offering thousands in cash to entice occupants to avoid eviction by moving out quietly and leaving the property and appliances intact. The payoff is called "cash-for-keys," and when Steve Whetzel started his home preservation company less than two years ago, the exchanges were practically unheard of, he said.
"Now, $5,000 to $9,000 seems to be the average, depending on the location and the value of the home," said Whetzel, who is a former deck and fencing installer-turned-foreclosure specialist and whose Sterling-based company, KNK Home Preservation, provides banks with locksmith services, property cleanup and all manner of repair work.
For banks, Whetzel said, the cash-for-keys deal is insurance for a smooth eviction. If occupants agree to clean up the property and leave it in good shape, the bank ultimately saves money and improves its chances of a quick resale.
"There's all kinds of sabotage going on, and that's what the banks are fearful of," Whetzel said.
Whetzel's company has grown to 19 employees, all formerly employed in construction, though the operation is so new his e-mail is still firstname.lastname@example.org. He expects a banner year for foreclosure services in 2009. "The good that's coming out of this is that we're reestablishing the market," he said.
After Zampino left Whetzel and his crew at the roach-infested townhouse, he drove to another eviction site nearby, where foreclosure specialist Terry Thompson was assessing the damage. There were bags of dog food in the garage, empty cans on the doorstep and, in the basement, signs of a half-finished, jerry-built apartment.
Thompson said a contractor had bought the house and rented out rooms to his workers but didn't pay the mortgage while he collected rent. "That's a scene that's been playing over and over in this area," Thompson said. "These guys got snookered by the owner."
And they were gone by the time Zampino arrived to evict them.
The house was only a few blocks from the townhouse where Zampino lives with his family. There have been several foreclosures in that area, too, he said. Some of the eviction orders have been for the homes of his neighbors.