Homeowners fight increase in break-ins by property managers
Alexandra and Tony Hlista were in South Carolina when someone broke into their Bethel Park home and left a note instructing them to call a property management firm.
The Hlistas returned to find a hole in the back door, the locks changed and the windows nailed shut. The note was from Safeguard Properties, hired by their mortgage servicer to secure homes in foreclosure.
Yet the Hlista home never was in foreclosure, Allegheny County records show.
“I was in shock,” said Alexandra Hlista, 25, who reached the property manager after the August 2012 break-in. “They said our home wasn't our home.”
Hundreds, perhaps thousands, of errant home break-ins occurred across the country in the aftermath of the nation's housing crisis. With many homes in foreclosure, banks want to make sure they can sell repossessed properties at the best possible price.
Diane Fusco, spokeswoman for Valley View, Ohio-based Safeguard, which operates in all states, said she could not comment on the Hlista case.
Lenders and property managers have the right to break into and secure homes to protect lenders' economic interest, legal experts say. In some states, including Pennsylvania, they don't need court orders, just a notice that they're coming unless homeowners call.
“There are clauses in many mortgages contracts that allow a lender to secure its property, but there's no enforceable clause that lets a bank come into your home willy nilly,” said Adam Taub, an attorney in Southfield, Mich., who has sued Safeguard Properties.
Taub said banks must determine that a house is abandoned before entering. Ignoring signs of occupancy and breaking in “probably represents a criminal act,” he said.
The Hlistas sued Safeguard in U.S. District Court for trespassing and invasion of privacy. The company denied the allegations in a court filing.
Fusco said Safeguard and its contractors look for signs of vacancy — unmown grass, utilities turned off or mail piled up.
Banks' property managers generally get $15 to drive past a house to see whether it looks abandoned, Taub said. They get $400 to $500 to break in.
Dan Sullivan, a former banker working as a foreclosure prevention specialist with Action-Housing Inc., Downtown, said banks often hire property managers upon issuing mortgage default notices.
“Banks are pushing to get through these foreclosures as quickly as possible,” Sullivan said.
Home foreclosures piled up when the housing bubble burst in 2007. An estimated 17.1 million American homes went into foreclosure between January 2008 and August, data from RealtyTrac Inc. show. Of those homes, 296,647 were in Pennsylvania and 59,964 were in the seven-county Pittsburgh region.
“This wasn't a problem 10 years ago,” said Michael Malakoff, a Downtown attorney representing the Hlistas, calling the break-ins “a breakdown in the foreclosure process.”
Typically in foreclosures, homeowners lose their homes in sheriff's sales if they cannot make up mortgage payments. At the end of August, there were 1.3 million homes in foreclosure nationally, 37,255 in Pennsylvania and 5,810 in the Pittsburgh region.
“We're swamped. We can hardly keep up,” said Jeff Grynkewicz of Grynkewicz Contracting in Irwin, a Safeguard contractor. His employees and subcontractors visit about 30 houses a day. They change locks and do “whatever's necessary to fix up the property.”
“We get work orders from (Safeguard and banks) when you don't pay your bills,” Grynkewicz said.
The Better Business Bureau Western Pennsylvania office in Green Tree said the bureau has received 49 complaints nationally against Safeguard in the past three years. Though Safeguard claims to be the nation's “largest mortgage field services” company, it competes with other nationwide companies, such as Lender Processing Services and Mortgage Contracting Services, and smaller regional companies.
Complaints about foreclosure break-ins recently reached a boiling point in Illinois. The state's attorney general last month sued Safeguard — the only state to do so — for illegal evictions, home break-ins, lock changes and utility shutoffs before lenders finalized foreclosures.
The Illinois attorney general received more than 400 complaints, spokeswoman Natalie Bauer said.
“We think this is happening all over the country, where property managers are illegally breaking into people's homes,” said Bauer. “It's a homeowner's worst nightmare.”
A $25 billion settlement in March 2012 between 49 states' attorneys general and five major banks was supposed to curb foreclosure abuses. The settlement required lenders to conduct foreclosures fairly and to modify troubled loans when possible.
Joe Peters, spokesman for the Pennsylvania Attorney General's Office, said it does not track property manager break-ins. But based on other data, he estimated the office received fewer than 10 complaints.
A subcontractor for Safeguard was breaking into Pamela McDeavitt's Shaler home through the garage in October 2010 before a friend intervened. McDeavitt missed mortgage payments in 2006 and fell into foreclosure, but a court overturned her eviction because the lender did not follow procedure.
“I still own this house,” said McDeavitt, 49, who sued Safeguard and Beneficial Mortgage Co. of Pennsylvania in Allegheny County for trespassing, invasion of privacy and negligence.
Safeguard's Fusco and an attorney for Beneficial, based in Philadelphia, declined to comment. Safeguard and Beneficial deny the allegations in court filings.
Grynkewicz said Safeguard hired him to secure McDeavitt's house, but “no one from my company” visited. Instead, Grynkewicz sent a subcontractor, whose name he said he could not recall.
Thomas Olson is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or firstname.lastname@example.org.