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Mortgage Meltdown Benefits Brokers and Clean-up Companies
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While foreclosures mount, some businesses are profiting. They include first-time home buyers, some mortgage brokers and companies that clean-up and fix-up foreclosed and vacant houses.
Only a few hours after closing on his new home in Hilliard, first-time homebuyer Michael Burkey is happy to conduct a tour through his still empty house.
“This is the kitchen they put in all new cabinets right before they moved out,” he says.
Burkey is a 27-year-old biomedical engineer. The house on Portside Drive, which cost him about $160,000, has three bedrooms and two-and-a-half bathrooms.
“The kitchen is connected to the great room pretty much a pretty big open room, all wood floor, and a stone fireplace there,” Burkey says.
He’d been looking for a house for a year and a half. Realtors, he said, kept mentioning an $8,000 tax credit for first time home buyers. The credit is part of the 2008 Housing and Economic Recovery Act. It’s available for homes purchased after April 8, 2008 and before December 1, 2009. The credit can be taken when the first time homebuyer files his or her 2009 taxes. It can also be obtained by amending the 2008 return. The amending process takes about 8 to 12 weeks, according to IRS spokesman Eric Erickson.
“Someone filed their taxes in April of this year and they just bought a house and they just closed today,” says Erickson, “well they can file an amended return and go back and get that credit now or they can wait when they file their 2009 taxes next year in 2010.”
Burkey says he plans to file an amended return and use the tax credit money to furnish his new home.
“I think it came along at a perfect time just because if I had bought the house last year I probably wouldn’t have gotten this credit,” says Burkey. “And I want to be able to put nice furniture into the house and this really affords me the opportunity to do that.”
Burkey is benefiting from the tax credit. Other people are benefitting in other ways. Some are businesses called “Trash-Out” companies. They go into a home after it goes through foreclosure and get the house ready for resale as quickly as possible. That may mean simply keeping the lawn mowed. But Bob Pritchard, who specializes in reselling foreclosed houses, says sometimes there’s a lot more to do.
“We’ve had situations where the house has been filled with three 30-cubic foot dumpsters’ worth of material that we had to haul away,” says Pritchard. “Trash bags, furniture that’s all busted just trash.”
It may cost more than a thousand dollars to rehabilitate the typical foreclosed house. But then, according to Pritchard, there are the real horror stories.
“I’ve seen some with human waste on the walls and the floors, beer and wine bottles strewn all over the house and the yard, half the windows in the house broken and torn apart,” says Pritchard. “I had one house once where someone had torn down every interior door, and they had went around and pounded and kicked every wall between every stud and all the drywall was damaged on every wall in every room. Every foot of it. It was just totally trashed.”
That sort of damage is often caused by vandals who have broken into a house or who have simply walked through the door left unlocked by the person being foreclosed upon. A-2-Z Field Services near Dublin is one of Ohio’s largest companies involved in trash out services. Business is picking up, according to company president William McMullen.
“It’s bad and getting worse,” he says.
There is more and more business for trash out companies to do. McMullen predicts a landslide in the near future if the moratoriums on foreclosures expire. He says his company is already working at a fever pitch.
“Our contractors are going non-stop and then our processors and our staff to support the workflow back in here will continue seven days a week,” he says.
Mortgage brokers are also doing well despite the faltering economy. They work for a client who’s looking to buy a home. In a sense they’re the middle man between the potential buyer and the lending institution.
“Overall from a mortgage banker broker side, it’s been a good year,” according to John Vogel Jr. is executive vice president of Mortgage Corporation of Ohio in Dublin where he’s taking a breather after a stressful past few months.
“There are times when you do feel overwhelmed,” Vogel says. “You hate to complain about it but it’s always good to be overwhelmed in that respect because you’re working hard.”
He says his salary is in the six figure range, another indication that the real estate business, at least for some, is good.
“Overall the market here in Ohio, and Columbus in particular, has been pretty good,” says Vogel. “And there are a lot of home buyers out there. All the foreclosures that have been going on there, all those the values have been going down in Columbus, there are deals out there and people are realizing that and people are going out there to get the best deals that they can.”
I’m Sam Hendren, WOSU News