Posted on 09/06/2007 8:10:45 AM PDT by 2banana
Metro housing slide keeps repo man busy 'Snowball effect' from mortgage woes, easy credit keeps lot overflowing
By TAMMY JOYNER The Atlanta Journal-Constitution
Published on: 09/03/07
Swing by Richard Grosvenor's business for a closeup of how quickly the nation's housing market is unraveling.
In the last six months, Grosvenor and his repo drivers have hauled in hundreds of vehicles in the course of normal business.
Richard Grosvenor stands amongst repossessed vehicles, including a Corvette taken from a plumber (left), on his 3-acre lot at Speedy Recovery in Lithonia on August 29, 2007. With credit and mortgage problems rising, Grosvenor has seen an increase in business at Speedy Recovery and repossesses a variety of vehicles including construction equipment, plumbing trucks and even realtors' cars.
Among their more recent hauls: a trailer packed with windows destined for a new home; two backhoes, two Bobcats, two dump trucks, as well as pickup trucks belonging to electricians, landscapers, plumbers and home builders. He's even repoed Realtors' luxury cars.
"The housing market is just taking a toll. It's an instant snowball effect," Grosvenor said strolling through the three-acre gravel lot at Speedy Recovery, a Lithonia business he started 14 years ago. He points to a plumber's black 2007 Corvette. Behind it is a Bobcat. A few yards away under a tree is a white Dodge Ram 3500 pickup voluntarily turned in by the owner of a construction company.
There's so much business that he has run out of space to park vehicles, even after two expansions at the lot. Much of the heavy equipment like the power generators picked up recently in downtown Atlanta are taken to auction immediately.
As busy as he is, Grosvenor believes this is just the start of a huge wave of repossessions: cars and home-building equipment amassed during an euphoric period when credit and mortgages flowed freely.
"I don't think it's really hit yet."
Repo expert Les McCook predicts that could occur later this year.
"The combination of Christmas holidays, layoffs, winter and the housing problem, I suspect we'll see a small spike,'' said McCook, executive director of the American Recovery Association, an Irving, Texas-based group with 243 members who have 500 offices in the repo business in the U.S. and Canada.
The homeowners struggling the most right now are those caught up in the risky subprime loans, McCook said, people who took on more house and more loan than they could afford. They're looking for a way out, but they're stuck.
"They can't get refinanced," he said. "You're sitting in a house paying interest-only or an ARM [adjustable-rate mortgage] and it's time to renew. The cars are the only thing they're going to have left. They'll lose the house first and keep the cars."
And they may not hold on to those long with repo guys on the prowl.
Beyond the obvious housing market casualties, Speedy Recovery's hauls are indicative of how the delayed-payment lifestyle is catching up with people.
A lot of Grosvenor's time is spent pursuing vehicles in the affluent parts of the northern arc of metro Atlanta. He's pulled Mercedes and other trinkets from gated golf-and-tennis communities in places like Roswell and Duluth.
"It's nothing for me to pull up in the driveway of a half-million-dollar home now," said Grosvenor. "Maybe it's the financing and these ARMs ... that's killing people."
Delayed gratification — a creed past generations lived by — has given way to delayed payments.
"It's intriguing," Wachovia economist John Silvia said. "It shows you the variety of the consumer credit experience. In some cases, people are living beyond their means ... and that reflects the shortsightedness of some of these consumers."
In Georgia and the Southeast, home loan delinquencies are running ahead of the nation, according to the latest data from the Mortgage Bankers Association.
By the time Grosvenor pulls up in the driveway of a home or business, the person is usually several months behind in payments. In some cases, it turns out to be a repeat customer — a sign of just how easy it's been to get credit in recent years.
Some voluntarily turn over the keys to the bank. Others, like the lawyer earlier this year, aren't so accommodating. He pulled a gun on Grosvenor over a Toyota Camry. Some others don't return calls or answer door bells, keeping their house lights off most of the time. Grosvenor has been chasing a homebuilder in Dawsonville for months, trying to get his Hummer.
But what really gets to him are the people who show up at his business in "a nicer, newer car" to retrieve their belongings from a repossessed vehicle.
Recently, Grosvenor spent most of a day playing a frustrating game of cat and mouse. He spotted a Yukon GMC at the Sugarloaf Country Club address provided by the bank. He parked his flatbed a few doors down in front of a brick monster mansion on the market for about a $1 million. The Yukon in the driveway turned out to be a 2003 model. The newer one was nowhere in sight.
He had similar luck on an earlier trip looking for a pickup truck at a Gwinnett County erosion control business. His final job of the day — two Mercedes at an upscale home in Roswell — proved just as futile. He went home empty-handed, an unusual day in an unusually busy month for the firm.
In fact, his drivers had surpassed their August goal of capturing 400 vehicles several days before the end of last month. All of his drivers in the Lithonia office and three other offices around the state are getting bonuses.
"I swear I feel like Dog the bounty hunter," Grosvenor said referring to a popular television show.
Errant bill payers generally try to finagle their finances to keep creditors and guys like Grosvenor at bay.
"They're surviving right now spending savings, living on credit," Grosvenor said. "But it's only going to get worse."
"It's nothing for me to pull up in the driveway of a half-million-dollar home now," said Grosvenor.
Dog the Bounty Hunter in $500,000 neighborhoods...
Michael Vick’s house?
Heck, high schools and university business schools should have this
guy into to do lectures on “personal finance”.
And tell the kids “get greedy or act stupid in your personal business...
and I or one of my colleagues will be seeing you!”.
When I sold books I found out that people in the biggest houss often had no money to spare. Give me a lead to a trailer park, anytime. Those people had discretionary income to buy new things.
I’m kinda psyched, hoping I can get a pool table and maybe a nice used car real cheap soon. Might even be a good time to buy that vacation home in the Poconos that was too expensive last year.
LOL
A few years ago I took a ride around one of the most affluent towns in the U.S. (it’s in northern New Jersey). The thing that really stood out to me was that most of these homes had pretty “average” cars parked in the driveways.
A friend of mine works at the largest Credit Union in town. She told me the other day that the CU has started listing tons of repoed stuff on Ebay, cars, etc. First time they have ever done that.
They sold a Porsche on there the other day.
Yesterday there were two realestate ladies in the driveway next door. One in an Escalade and the other in a Lexus. They put up a for sale sign.
The owner has spent a ton of money completely reworking the house and putting up all kinds of cutsy stuff on the house and in the yard. She built a new garage and an out building. The garage has “Antiques” and the out Building has “Black Smith” Signs. The new smallest available pool says “ Ol Swimming Hole”
It is apparent she has been watching a lot of “Flip That House “ and all the other real estate H$G shows. Reading this thread I concluded she has a no interest or ARM and is experiencing heartburn as the rate rises.
She might be in trouble having got in late before prices started down and rates started rising. In 1929, cabbies were giving stock tips on the morning the market died.
That’s true. Around here people have bought more house than they can afford. They also have at least one new car, but they have very minmal furniture in the house and no extra money.
Exactly. Cars are rapidly depreciating assets, and smart people avoid tying up too much capital in them. The absence of a car payment can literally change one's financial life.
Here comes the snowball that a few on FR were saying could never happen. Was it because global warming helps the economy grow?
Close. I lived in Atlanta until recently and it was a very common sight to see a flatbed truck labeled “Ace Towing” or “Ace Wrecker” hauling a pristine and at most 1-2 year old Lexus down I-75. Unless crashed, there is no way one of these vehicles is going to break down “by the side of the road” and need a tow. They are simply too new and thus too reliable. Atlanta had and still has a class of flashy blacks who may rent an apartment, but drive a BMW or Mercedes on lease. The flashier they are, the harder they fall.
Go into an old money neighborhood and you will see jalopies. The last I heard Warren Buffet lived in a $60,000 house and drvoe an old car. When you have truly arrived and are secure, you stop often doing conspicuous consumption to keep up with the Joneses.
“Here comes the snowball that a few on FR were saying could never happen.”
It has happened.........
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