Long Island businesses are finding opportunity in foreclosures as they win contracts to maintain properties and ready them for sale.
Last year there were 12,175 new foreclosure filings on Long Island. The number is dropping, but there were nearly 7,200 filed by mid-September of this year, according to the state Office of Court Administration.
Though the pace of new filings is slowing from the height of the housing crisis, New York's almost 3-year foreclosure process -- tied with New Jersey for longest in the nation -- means the post-recession load of cases is taking longer to clear here than nationally. So the work associated with foreclosed properties will continue for years to come, experts said.
Foreclosures represent a tragedy for families losing their homes, and the vacant properties left behind are a worry for neighbors who fear they will fall into disrepair, potentially hurting their property values.
Work to maintain the properties includes boarding up houses, painting, lawn mowing and tree trimming. Before sale, many houses have to be cleaned out.
National firms at helm
In most cases area companies do the work as subcontractors for national firms, Bank of America spokesman Rick Simon said. "I believe that would be the business model of most, if not all, of the major banks." Several other banks and credit unions declined to comment.
Real estate professionals can work in tandem with lenders to oversee the contractors. "We tell them what we want done, and then we inspect what's been done to make sure that it measures up to what the bank expects the property to look like," said John Fitzgerald, a partner at Realty Connect USA of Woodbury, which inspects foreclosed properties once a week. Major lenders such as Bank of America, Fannie Mae and Freddie Mac all require lawns to be cut and maintenance to be done to conform to the standards of local jurisdictions, Fitzgerald said.
Towns step in
When lenders don't take responsibility, towns can step in to handle blighted houses. For example, the Islip Town board votes on eight to 10 resolutions per meeting to address foreclosed homes, town spokeswoman Patricia Kaloski said.
That created an opportunity for contractors USA Emergency Board Up of Brentwood and Hazel Landscapes of Bohemia, which won bids to board up and maintain the vacant houses. The town charges the property owner through the property tax rolls, Kaloski said.
Francis Hill, owner of The Junkluggers of Nassau County, a franchised clean-out and trash-hauling company, said up to 10 percent of his business comes from foreclosures. He cultivates relationships with real estate salespeople, attorneys and property managers who are pressed to get houses to market quickly. Junkluggers specializes in whole-house and landscaping cleanup jobs, Hill said.
Scott Tree Co. in Glen Cove also preps foreclosed properties for sale. Owner Scott Nicolich said he is hired by real estate firms ready to flip houses, and he handles the tree trimming and landscaping.
In the lean years when homeowners cut back on tree work, Nicolich says he sometimes gave discounts to financially strapped clients who told him, "My house is in foreclosure. I'm trying to save it." But now, he says, business is finally better.
More work coming
Of all Long Island homes with mortgages, 5.59 percent were in the foreclosure process in July, down 0.81 percentage points from a year earlier -- but still higher than in the nation as a whole, where 1.66 percent of homes with mortgages were in foreclosure, according to Core-Logic, a real estate data firm in Irvine, California.
"We believe that a majority of the foreclosures are still in the pipeline sitting in the court system," said Joseph Willen, president and chief executive of the Advantage Group, a Melville-based title insurance company that diversified about 20 years ago to offer foreclosure filings, records and advertising to hedge its bets against an unpredictable economy.
In 2008 the title business rapidly lost 60 percent of its volume, Willen says, but the loss was balanced by an increase in foreclosure business to about 500 searches a week.
"We believe there are at least a few more years of steady volume coming," he said.