Thursday, May 10, 2007

Middle Class Starting to Lose Homes Too

Better-heeled failing home economics too

As more owners are unable to make higher payments, Deputy Strickland finds himself evicting people in nicer neighborhoods.

By David Streitfeld
Times Staff Writer

May 6, 2007

Sheriff's Deputy Mike Strickland is a postman of bad news, delivering eviction notices in the western stretch of San Bernardino County.

He is armed with a Glock .45, which he seldom draws, and Scotch tape, which he goes through in prodigious amounts while posting court orders on doors and windows.

The deputy spends most of his days at down-market apartment complexes, where the destitute, the addicted and the forlorn fitfully live. But in recent months he has begun venturing into neighborhoods with spacious homes and groomed yards, bringing his legal warnings to those who have fallen hopelessly behind on their mortgages.

These people typically bought a home they couldn't afford or drained their equity through incessant refinancing. If they had a chance to sell, they passed it up.

Eventually, the lender foreclosed on the property. When it was over, the home was auctioned off.

Now there's a new owner. But they still won't leave.

In some cases it's denial; in others, unwarranted hope. They hang on as long as they can — often to the last week, sometimes to the last day.

Most of the time, they abandon the premises before they have to be forcibly removed, but not always.

That's when Strickland shows up.

"You see me coming. You know I'm not exactly bringing tidings of joy," the deputy says. "I'm the grim reaper."

Take the house he is heading to at the moment, a three-bedroom in Rancho Cucamonga. He is supposed to meet a representative of Deutsche Bank, the new owner, as well as the bank's locksmith.

Once the door is open, Strickland will go through the rooms, quickly but carefully. A couple of years ago, a foreclosed man in Rialto shot himself when Strickland showed up.

This time a bank rep and an assistant are already inside when Strickland arrives. The door was open, they say, and they have so many foreclosed homes to prepare for sale, they couldn't wait.

Strickland checks the place out just the same.

Much of the furniture is gone, but the former owner's teddy bears are still there. Two eggs are rolling around on the kitchen counter. A bottle of ale is on the table. On the front door is a note for a deliveryman: "Please leave package in back. Will be back shortly."

Not shortly enough. There's a drained pool in the back, and the bank rep, Riverside foreclosure specialist Kemper Kelley, is hustling to secure a loose gate before a neighborhood tyke wanders in and takes a fall.

The foreclosed owner, identified in court paperwork as Aaron Engerson, should have known his days were numbered. "We sent letters, put notices on the door, offered him cash for his keys," Kelley says.

Engerson, either oblivious or optimistic, ignored it all. He could not be reached for comment.

Strickland tapes a red sheet of paper to the front door: "Unauthorized entry prohibited by law. Violators subject to arrest and prosecution."

Of all the ways to lose your home, few are as shameful as having the sheriff lock you out. Yet Strickland regularly sees such people.

"They say, 'You're really going to evict me? I'm going to lose my house? How can you do that?' I say, 'I've got a court order,' " the deputy says.

He recently went to do an eviction at a gated community in Chino Hills. The foreclosed owner, not realizing he was out of time and luck, was still trying to sell the place.

As soon as he noticed Strickland, he jumped in his car and drove off, leaving a prospective buyer bewildered at the curb.

By California law, evictions must be performed by a sworn officer. Between 6:30 a.m. and midafternoon, four days a week, Strickland does at least a dozen while delivering another dozen warnings of pending evictions. "This is a good job, but a busy job," he says.

Indeed, defaults and foreclosures are rising nationwide as subprime loans with low introductory rates adjust higher and homeowners struggle with payments.

The trend is especially apparent in such areas as the Inland Empire, where tracts of new homes drew first-time buyers, who are especially vulnerable to foreclosure because they often have little equity.

In the first three months of the year, San Bernardino County recorded 909 foreclosures, according to research firm DataQuick Information Systems. That's double the number in the last quarter of 2006.

Strickland, a San Bernardino native, was born in 1962 — plenty of time to see the Inland Empire make several round trips between boom and bust. In the early 1990s, he lived in a little two-bedroom in north San Bernardino. He bought it for $70,000, sold it for about the same, and shakes his head in wonder at the thought that it is now worth many times that.

In 1997, Strickland married Debbie, who works at the opposite end of the real estate business: She is an escrow officer for a large lender. They live in Riverside. No chance of this deputy getting evicted. In fact, he is hoping to pay off the mortgage by the time he retires, in a decade or so.

Not many Californians can conceive of paying off their mortgages anymore. The sums involved are just too large.

"A lot of people live over their means," Strickland says. "One little thing goes wrong, they're in a world of hurt."

And, occasionally, a world of anger. He stops to post an eviction warning in a neighborhood where many houses fetch the high six figures. Cautiously, he opens a front gate. "Here, doggy! Here, doggy!" he calls. But no pit bull rushes him.

On the front door is taped a note from the owner, Partha Chowdhury, asserting with vehemence but inept spelling that he is still in "possion" of this house. "Beware," he writes, "house is armed."

Past the door, on the inside, are large potted plants, an improvised barricade. The mailbox is overflowing.

"There's always a home where you wonder why you're there," Strickland says, attaching a notice to the door saying the eviction would take place in eight days. "Now there's more of them."

Foreclosure is a long, complicated process. The first official signpost of trouble is a notice of default, filed by the lender a few months after the owner stops paying the mortgage.

In the great Southern California bust of the early 1990s, real estate legend holds, many defaulting homeowners mailed their keys back to the lenders, in effect washing their hands of the whole matter, and promptly left town. Thus was born the term "jingle mail."

Whether they actually mail their keys off, most of the foreclosed are going quietly this time too. But not all.

Sometimes people stay because they're not the owners. They're renters, mailing off a check to a landlord who is using the money for anything but paying the mortgage. Until the last minute, the tenants don't know anything is wrong.

Real estate agent Barbara Perkins recalls the case of a man who bought a condo for his mother but neglected to keep up with the payments. "When we told her she was being foreclosed, she was awfully upset," she says.

Perkins works for Home Center Realty, an Inland Empire firm that has arrangements with Countrywide Financial Corp., Wells Fargo & Co. and other lenders that have foreclosed homes they want to be rid of.

Home Center evaluates and prepares each home for sale, a process that can include contracting with "trash-out" firms who secure the place, make repairs and spruce it up.

First, though, the home must be empty. Of the 32 foreclosed homes Perkins and her colleagues have worked on, seven were still occupied. "Some people just don't believe it," she says. "They say, 'I want my house back.' "

A Perris family, which hadn't made a mortgage payment since March 2006, proved particularly intractable. Perkins heard a different explanation each time she stopped by to remind them that they no longer owned the house and had to move.

"The husband had an accident, the husband was hurt, the husband has a bad heart, this is going to kill him, then the daughter had an accident," she recounts.

What lenders try to do in such cases is offer a carrot and wave a stick. The first involves bribing the people out with money, a procedure lenders have dubbed "cash for keys." The stick is asking the court for an eviction order.

Cash for keys discourages the former owner from destroying the home. This particular family, after getting $1,200 from the lender and another two-week extension, finally left April 15 without incident.

Perkins is currently dealing with two recalcitrant owners who can't be paid to leave. They'll be evicted soon.

Like many, she is predicting foreclosures will continue their steep rise. Unless more people start going without fuss, Deputy Strickland will be busier than ever.

Late last month, his work took him into a neighborhood north of the Foothill Freeway. Most of the homes there are only a few years old. At the height of the boom, some sold for more than $1 million.

He located the foreclosed house, which appeared to be at least 4,000 square feet.

As he walked up, a woman pulled into the driveway in a Hyundai Avanti, two boys in the back. She didn't speak much English. Strickland patiently conveyed that she was in big trouble.

"I am renting," she said. But she said she didn't recognize the name of the owner on the deputy's eviction sheet.

"You're going to have to leave in a week," he said. When she finally understood, her breathing became labored, as if she had gone into shock.

On Thursday afternoon, Strickland and the bank representative showed up to perform the eviction. John Kim, an English-speaking friend of the family, answered the door. Kim said the family was in court filing for bankruptcy protection at that moment.

Bankruptcy is one of the few things that can postpone an eviction, so Strickland and the bank rep agreed to return later in the afternoon to see the court documents. But when they got back, the family still hadn't returned.

Kim, the only one in the house, watched the locks being changed. Then he called the mother and told her not to come back.

It wasn't her house anymore.

david.streitfeld@latimes.com
http://www.latimes.com/news/local/la-fi-evict6may06,1,1733807.story