Foreclosures and Tax Deeds – A Future View

Foreclosure and Tax Deed sales are poised to offer a glut of investment opportunities through the United States. Statistics and emerging trends are proving the point I made six months ago that the greatest investment opportunity in the USA right at this moment is to invest in real estate through Tax Deed sales. Let us examine why this is so.

Zillow.com, a real estate trend tracking site, has hard figures that show that over 3 million homes are either in foreclosure or will enter the foreclosure process in the very near future. In fact, in as little as the next six months, and by the end of the second quarter of 2010, most will be in foreclosure. This trend, based on available statistics, is only the tip of the iceberg! As in the terrible tragedy that befell the Titanic, it is what is hidden under the water that ultimately sinks the ship.

Available statistics only show the visible iceberg, while the real story of Tax Deed and foreclosure sales remain underwater, or put another way, under the radar, where the statisticians can not see the blips yet of the emerging disasters of new foreclosures. News services are starting to report a frightening new trend that is causing the banking and financial sectors to freeze up due to the implications.

Simply put, people who have been suffering from the scams the banking and lending industry imposed upon them in years past, are fed up with the Fed, the bailouts of the banks and other lenders, and the lies that they told, to the point that they are now reacting in a negatively real and tangible way. When they find that they are getting behind on their mortgage payments and are facing certain foreclosure, they take matters into their own hands, and they bail out – literally!

Lenders are now receiving in the mail, in ever increasing numbers, the keys to abandoned homes! Often the homes are gutted of all valuable and profitable fixtures such as air conditioning, kitchens, bathrooms, and even expensive copper wiring. Not all homes suffer from this, but a percentage of the homes will, depending on how angry the long suffering former owners were at the time of them abandoning the home. However, a large number of unadulterated homes left in good condition will also be abandoned, and ultimately added to the mad mix of the foreclosure glut.

Another trend that is scaring the hell out of lenders is the judiciary imposing a ‘burden of proof’ upon the banks or mortgage holders to produce the ‘original’ mortgage document. Most lenders cannot produce this original document due to the Wall Street practice of ‘bundling’ loans and reselling them to foreign investment groups.

The unfortunate consequence of this is that if the lenders cannot produce the original document, they have no proof that they own the loan. The proof is lost in the mix of their making, and they are reaping what they have sown. Banks are starting to lose in the courts, often with the judiciary awarding the borrower the home debt free! The system is in shock and the banks are stuck. They knew this was coming and this is the very reason why the governments bailed them out.

Now for the good news, as every dark cloud does indeed have a silver lining. Given the average redemption period of two years that most counties impose upon the property owner to pay the property taxes, and given that big finance is frozen on the spot, and not willing to pay the taxes owed, foreclosed homes are going to emerge in greater numbers at Tax Deed sales!

All kinds of homes, in good and not so good condition, are going through the Tax Deed sales process throughout the United States right now, and in the near future. Get ready for the Tax Deed boom!

Foreclosure Cleanup Industry – White-Glove Versus Broom-Swept Cleaning

Foreclosure cleanup companies handle the maintenance, securing, and cleanup of homes after they have gone through foreclosure. This low-cost startup industry is burgeoning as more and more homes are being foreclosed upon. And, with the next wave of adjustable rate mortgages destined to hit the market soon, there is no end to the foreclosure crisis in the immediate future.

A big part of the foreclosure cleanup industry’s services focuses on, quite naturally, cleaning. There are two distinct types of cleaning in the foreclosure cleanup industry: White-glove and broom-swept. Not knowing the difference can cost a company cleaning foreclosures dearly in time, money and reputation. Let’s visit the two types of cleaning.

White-glove Cleaning

White-glove cleaning will include washing windows inside and out (including window sills), cleaning baseboards, appliances (including pulling out appliances and cleaning underneath), clearing spider webs from ceilings and closet interiors, scrubbing bathroom tile, mirrors, pulling out drawers and wiping them down, wiping all exterior surfaces, shampooing carpet, waxing floors, cleaning ceiling and floor vents, washing ceiling fans, meticulous corner-to-corner details, and on and on and on. There are so many details when it comes to white-glove cleaning; a checklist is a must for new staff so they know what you expect as the foreclosure cleaning business owner.

Hire Pros for White-glove Cleaning

A white-glove cleaning job really requires cleaning professionals. You really can’t just send anyone to a site when you get a call for a detailed job such as this. As a foreclosure cleanup company, you will also charge considerably more when you’re cleaning a foreclosure under the white-glove services heading.

Who will Purchase White-glove Cleaning?

In many instances, a foreclosure home being purchased by a buyer will require a white-glove cleaning, because someone is likely getting ready to live in it. Rarely will a foreclosure just sitting in a bank’s inventory of foreclosed properties call for this type of detailed cleaning — unless it’s a high-end property with lots of buyer interest.

Overview of Broom-swept Cleaning

Most cleaning of foreclosure properties will call for broom-swept type cleaning. This type of cleaning is what I like to call “dry-rag” cleaning (not a literal dry rag, but you get the point). With broom-swept cleaning, you simply complete a surface clean, wipe and scoop: the floors are swept; the kitchen, bath, and living areas are wiped down, and the home or unit is left free of debris. Generally, broom-swept cleaning is a lite clean, wipe and scoop service.

However, note that many of the larger REO-type contractors have very detailed expectations when it comes to cleaning a home. So if you’re a subcontractor, you will be given specific details on what a particular larger contractor expects when it comes to broom-swept cleaning. Some companies expect more detail in this type of cleaning than others, so be sure to ask for checklists if you’re working for a primary contractor.

Clarify What the Client Wants

When a foreclosure cleanup clients calls and asks for a cleanup estimate, make sure you clarify what they’re asking for before you head to the property to give the estimate. Do they really want white-glove cleaning; or do they mean broom-swept?

Take the time to clarify what the potential client is asking for so you don’t do two things:

1. Clarify so you don’t overprice a job. For example, the client may simply want a quick broom-swept job and you could give an estimate for white glove because you have not asked them specifically what type of cleaning they require.

2. Clarify so you don’t under price and under deliver. For example, if the potential client is a buyer, they likely want white-glove, but they will love your low price if you misunderstand and quote them for a broom-swept job. By the same token, that same buyer will be disappointed at the finished product if you give them broom-swept service when they expect white-glove.

Many times your clients won’t know what’s entailed in each type of cleaning. Explain to them so they have full knowledge and you all are on the same page when it comes to service and pricing.

Review Your Company’s Policies

Review your foreclosure cleanup company’s policies, procedures, marketing materials, website, and pricing structure as it relates to cleaning services. Are your services as it relates to foreclosure “cleaning” clear? If not, change them so you move forward delivering what the client expects and getting the price you deserve.

Good luck with your foreclosure cleanup business!

How to Price Foreclosure Cleanup Jobs For Profit Using HUD’s Guidelines

A foreclosure cleanup business does everything from lawn maintenance, to trashouts, to cleaning, pressure washing, gutter cleaning, repairs and more.

The foreclosure trashout industry is proving to be a lucrative business option for hardworking entrepreneurs. With one in every 25 homes in foreclosure, per Michael Williams, Fannie Mae CEO, and with millions of adjustable-rate mortgages poised to reset in the coming years (creating the prospect of a new round of foreclosures), foreclosure cleaning startups are perfectly situated to have evergreen enterprises for years to come.

Though foreclosure cleaning is a burgeoning industry, due to the sheer number of jobs available, foreclosure cleanup can be a business with thin profit margins if entrepreneurs aren’t pricing their services for profit.

Pricing for profit can be tricky for new property preservation business owner who don’t know the ins and outs of how contracts are won, who gets paid first, where they are on the totem pole in getting paid, etc.

A good tool to use in pricing foreclosure and trashout type jobs is HUD’s pricing guidelines for property preservation type companies — BUT, to use this tool alone can be a grave mistake.

When using HUD’s guidelines to price jobs, business owners should be aware that the tables list the maximum amount HUD will generally pay the PRIMARY contractor of a foreclosure cleaning job.

As a smaller company, business owners should know where they are on the totem pole in actually getting paid to know how to charge using the tables. They should also learn how to figure out whether they are the primary subcontractor, number two in line, number three, etc. This will not only help them figure out how to price, but will also guide them in figuring out the best strategy to use in winning jobs.

Foreclosure cleanup business owners cannot simply look at the HUD pricing charts and use those figures for bidding, or they’ll certainly overbid a job and lose out. The tables have to be dissected effectively

Remember, the HUD pricing guidelines for foreclosure cleaning are what HUD will pay, maximum, for a service (though certain scenarios will permit them to go higher with substantiating information). The amounts listed in the charts are really for that primary contractor.

Anybody can price, but pricing “for profit” in the burgeoning foreclosure cleaning industry is an art. New foreclosure cleanup businesses should plan to do their research so they can learn how to dissect the HUD charts and price effectively for profit to win more cleanup business.

Foreclosure Defense: Process Servers Allegedly Filing False Affidavits

Recent reports indicate that approximately 462,339 foreclosure cases were pending in Florida as of June 30.

Following foreclosure moratoriums by Ally Financial, Bank of America, JP Morgan Chase, and PNC Bank, the settlement of deceptive marketing charges by Wells Fargo, and the Attorney General's investigation into faulty foreclosure practices at the Florida Default Law Group, the Law Offices of David J. Stern, PA; the Law Offices of Marshall C. Watson, PA; and Shapiro & Fishman, LLP, investigators have turned up a new problem.

Process servers are now alleged to have filed false affidavits in support of personal service in foreclosure matters.

Foreclosure defense attorneys claim to have documented a number of cases where process servers filed false affidavits. While investigating the law firms that employed "robo-signers," state investigators are also closely examining service of process in a number of cases.

Recent foreclosure defense cases allege homeowners never received a court summons even though they still occupied their home, while others allege that process servers did not take the required steps to locate them or filed false affidavits about whom or when they delivered papers.

According to the lawsuits, some process servers violated rules related to the personal delivery of legal papers. Like robo-signing foreclosure documents without reviewing them for accuracy, a number of homeowners are now alleging they were never served with foreclosure papers.

Once rare, "bad service" of process has become more common as lenders and their attorneys speed thousands of foreclosure cases through "rocket dockets" that are designed to clear an ever growing backlog.

"With the foreclosure debacle, it's become more complicated," says Carlos J. Reyes, a foreclosure defense attorney with the Reyes Law Group in Fort Lauderdale. "For the sake of expediency, process servers are being rushed. As they are paid by the piece, they have an interest in earning a higher income."

Homeowners involved in foreclosures are required to receive a summons and complaint personally delivered by a process server. Repeated attempts at personal service are required before court permission can be obtained to publish a legal notice in the alternative.

Some process servers have allegedly cut corners. One recently claimed she could not find a homeowner facing foreclosure on a second home, despite conducting extensive record checks. This held true even though the foreclosure complaint clearly provided a primary home address in Connecticut.

Lenders and attorneys typically contract their summons delivery work to large process serving firms, who sub-contract to private independent servers. In her deposition to state investigators, former Stern paralegal Tammie Lou Kapusta, testified that summons serving procedures were a "complete mess," with homeowners routinely complaining they never received papers.

She and another former employee, Kelly Scott, said their managers told them to move forward with the foreclosures anyway.

Investigators also questioned staff at Stern's firm regarding billing practices that involved serving multiple parties at an address and billing for each one.

"Good service of process is crucial", Reyes said. He has heard of homeowners losing their home because they never received a summons and missed filing dates or court hearings.

While a court summons must be accepted by an adult, state law does not require it to be served upon the property owner. No one has to sign, verifying receipt, "which makes it easier to say the person was served, when they weren't," Reyes said.

Laws governing the service of process vary from state to state. In Florida, there is no statewide licensing or regulating body for process servers, and rules vary greatly among the 20 judicial circuits.

Among the largest with operations in ten states is Tampa-based ProVest. Although ownership interest by the law firms has been denied, they maintain support staff at the Law Offices of David J. Stern and Shapiro & Fishman in Boca Raton. Marshall C. Watson also uses ProVest.

While ProVest declined to comment on specific cases, company president James Ward stated they "utilize properly licensed or authorized independent contractors" and require them to "fully comply with state and local guidelines."

To learn more about the mortgage foreclosure crisis or to file a complaint with the Attorney General's Office, visit their website at http://www.myfloridalegal.com or call (866) 9-NO-SCAM (866-966-7226).

Source: The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune (Media General Group) – http://www2.highlandstoday.com/content/2010/nov/07/foreclosure-defense-process-servers- allegedly-fili /