By: Clare Curley
Issue Date: May 2009

When Americans can rely on Civil War era technology for their safety, something must be working. Such is the case for pin tumbler locks, which still protect the vast majority of buildings in North America. “We’re not discovering new vulnerabilities with a lock that’s been around 150 years,” says Lloyd Seliber, CML and spokesperson for the Associated Locksmiths of America.

Still, the number of people trying to break into every new lock on the market, as well as the old ones, means property managers need to be all the more vigilant. That task is only multiplied when a master-keyed system is in place. Whether mechanical or electronic, many security problems are caused by lack of oversight.

Some breaches are surprisingly basic. “People hand out too many keys because they don’t know what key works for what door,” says Seliber, who deals mostly in new construction. “If you have the greatest lock system in the world and you’re careless about handing out, you’re going to get sued.” While locking systems are becoming increasingly complex, maintaining them doesn’t need to be. There are many precautions that can protect property and avoid the need to reengineer an entire security system.

Here are a few:

Address any vulnerabilities in the entranceway, like a door that doesn’t always close properly.
If there is a theft, be able to account for every key to the building.
Ask local locksmiths about harder-to-copy proprietary or patent protected keys, which vary region to region.
There’s no formula for when to cross over into electronic systems, but Seliber offers this guideline: Where more than 25 keys are issued for a single door, electronic access should control that entrance.
These days, many builders are turning to card readers and proximity devices, attracted by access control technology and new data storage capabilities. “[New technology] allows them to have much easier key changes. You don’t have to pull out lock and re-pin it,” notes Mike Tierney, standards coordinator, Builders Hardware Manufacturers Association. “But most systems, both mechanical or electronic, have been designed to be reliable.”

However, each system brings its own set of factors to consider. While mechanical master-keyed systems are a hassle to change, newer systems using cards, codes or computer chips are pricey and susceptible to power outages or battery issues. And unlike mechanical locks, whatever backs are built into electronic systems are still unknown.

According to Anthony Sloat, a marketing agent at Academy Locksmith, Inc., in Anaheim, CA, the trend in residential property is to have no master-keyed system at all. “The perception is the people are safer [without a master key]” he says. “The downside of that is if there’s a flood in someone’s basement and they’re on vacation, there’s no way for someone to get in.”

Sloat worries about a possible decline in spending on security among construction companies due to the condition of the housing market. But he is also skeptical of some of the high-tech products on the market and cautions again relying solely on finger print or card swipe systems. “You should still have a locking deadbolt,” he says. “I just don’t think the new technology is tried yet.”

While UL listings and ANC standards are a start, following them alone won’t protect against every threat. A local locksmith, who knows which keys are being duplicated and which locks are being compromised in the area, might help.

More and more, people who would normally be in a position to sell their homes are seeing their home’s value decreasing. They are then making the decision to hold on to the property longer term. Academy Locksmith, Inc found that many of the customers they were servicing had many areas where their home’s security was compromised. Ten years ago Academy Locksmith, Inc had developed a security survey on the back of their receipts that they used to evaluate their residential clients security needs. By moving this tool onto their website the customer can log on and take the survey when ever they want. In today’s two job economy, people simply did not have the time to let Academy Locksmith’s technicians go through their home to do the survey.

“I hadn’t realized that the lights leading to my front door were so low that they may be tampered with.” One customer from San Bernadino said. “Academy Locksmith, Inc gave me some valuable tips that helped me improved my security without spending a great deal of money.” “Our purpose was to inform the customer as to what to think about when considering their home’s security.” Vice President Tim Braun said at a recent security conference. “We hope that (THE HOME SECURITY GRADERsm) will give the average home owner the tools needed to feel more secure in their house or apartment.”

Academy Locksmith, Inc specializes in physical security, an industry they have been involved in for 18 years. In that time, they have seen, and welcomed, tighter governmental controls on the locksmith industry. California has very strict licensing rules for locksmiths and has recently changed the statutes to introduce more severe penalties for non compliance. Not only is Academy Locksmith compliant with these regulations, they helped to create them.

If you would like any more information about this topic, or to schedule an interview with Tim Braun, please call Anthony C. Sloat at 1-800-964-0700 or email Anthony at asloat@academylocksmith.org.

Q: Are locksmiths required to have a clean criminal history? Do locksmith owners run background checks on new hires?

– Jessica Griffith,

Huntington Beach

A: All locksmiths in California are required to have a license from the Department of Consumer Affairs Bureau of Security and Investigative Services, said Tim Braun of Academy Locksmith in Anaheim.

In order to obtain the license, the applicant must provide fingerprints to the police department, which forwards them to the state, and a list of past residences and employers. The state and the Department of Justice will also run a background check, Braun said.

Locksmith employers do not typically run background checks on employees because the license already provides for that. Employers can look up a license number with the state and might run financial checks on new hires.

Real-estate experts and economists say today’s housing woes might be just the beginning of trouble.

In the past six months, almost 22,000 Inland homeowners received notices of default, the first step a lender takes to foreclose on a property. During those same months, 6,367 homes were taken through foreclosure.

Christopher L. Cagan, director of research and analytics for Santa Ana-based First American Corelogic, said he expects at least another 60,000 foreclosures in the Inland region in the next four to six years.

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Josh Brown / The Press-Enterprise

Forty-three percent of adjustable mortgages are expected to reset to higher interest rates this year, which could increase foreclosures.

He identified about 221,700 adjustable-rate mortgages sold in Riverside and San Bernardino counties from 2004 through the first half of 2006.

“It’s sort of like watching the snake swallow the mouse,” said John Karevoll, an analyst for La Jolla research firm DataQuick Information Systems. “We have this huge amount of loans sort of moving through the pipeline.”

Many of the homeowners fighting foreclosure bought houses during the peak of the housing boom, when prices were highest, Karevoll said.

“The loans we have left may be even more at risk, only because we’re in a flat appreciation market,” he said.

The median home sales price in Riverside County was $400,000 last month, down from $432,000 in December. In San Bernardino County, the median price dropped to $365,000 from $372,000 in the same time period.

The falling home prices largely have been caused by more houses being put on the market, either by builders or homeowners listing a house they can’t afford.

“First they try to refinance, and then they’ll list their property, putting more downward pressure on the prices,” said Esmael Adibi, an economist at Chapman University in Orange. “This is really what is adding to the resale inventory in the marketplace, but demand has dried up. That’s why you are seeing notices of defaults going up.”

Subprime Mortgages

Subprime mortgages, or those given to individuals with less-than-stellar credit, gained popularity in 2005 and early 2006 as the lending industry looked for ways to qualify more people to become homebuyers after home prices skyrocketed.

But the loans were inherently risky. Though they start at exceptionally low interest rates, which result in low monthly payments attractive to first-time homebuyers with limited financial resources, they eventually adjust to rates significantly above market to compensate for the borrower’s poor credit.

“Some of these people were just caught up in the incredible appreciation going on,” said Steve Johnson, of MetroStudy, a Riverside real-estate consulting firm. “They thought it was sort of a fail-safe scenario.”

Some buyers were led into the dicey mortgages by overly ambitious mortgage brokers, Karevoll added.

When home values were escalating, subprime mortgages financed homes for a lot of people who saw their equity grow and then refinanced into mortgages with better terms.

But since home values have fallen and home sales slowed, more homeowners are trapped in mortgages that are now a bad deal. They may not have enough equity in their houses to either refinance or sell them at a price that will cover their debt.

When the adjustable-rate loans reset to higher monthly payments, problems arise as many borrowers can’t afford the new payments.

Making matters worse, many subprime borrowers who couldn’t afford a down payment were able to get 100 percent financing for a mortgage they could not otherwise afford. And as lenders tightened rules for such loans, many of those borrowers no longer qualify for more attractive rates.

Some of the loans also allowed borrowers to make interest-only monthly payments to start, but in a few years the payments would jump sharply to include both principal and interest at a higher rate.

“What’s sad is a lot of those homebuyers would have qualified for prime loans but saw an opportunity to get a good deal and not have to pay much of a down payment,” Johnson said.

Forty-three percent of all adjustable mortgages, including the subprime ones, are expected to reset to higher interest rates this year, and the remainder are expected to reset by 2010.

Other people bought on speculation, hoping to renovate and flip a house for a profit. But many bought when prices were their highest, and when prices fell were left trying to sell a house at a loss.

“People who were investors were very comfortable in the economy, and leveraged the value of their own home to buy other houses and flip them,” Johnson said. “So we have another wave of these coming through, some of them subprime.”

State of the Housing Market

Some economists have predicted the housing market could pick back up by the end of next year, but other experts say the market will take longer to rebound.

Countrywide Financial, the nation’s largest mortgage lender, last week predicted the national housing market would not recover until well into 2009. The company’s forecast sent shock waves through the stock market, resulting in the worst week for the Dow Jones Industrial Average and the Standard & Poor’s 500 index in five years.

“The thing is, the market right now is precariously balanced, and it will only take a little nudge in either direction to change everyone’s forecasts,” said DataQuick’s Karevoll.

Adibi, the Chapman economist, warned that falling home prices could lead to lower consumer spending.

“The retail market is going to show some softness,” he said. “Already we have seen a decline in spending on furniture and spending tied to new homes.”

Robert Kleinhenz, deputy chief economist for the California Association of Realtors, said many homeowners who want to trade up to a bigger house are having a difficult time finding a qualified buyer.

“If nothing else, that leads to a longer time on the market,” he said. “It all depends on what extent the homeowner needs to sell.”

A large part of the Inland economy has grown because of housing activity, and some sectors have had to adjust to new conditions.

Tim Braun, vice president of Academy Locksmith in Anaheim, said his firm was getting a tremendous amount of work about three years ago to install new locks on recently bought homes.

“You never realized how good it was,” Braun said.

About 18 months ago, however, he started contacting banks for possible foreclosure work in order to drive up his business. Though he has picked up four new accounts, it still hasn’t offset the amount his business has declined since the housing market went south.

Sprucing Up Homes

Anthony Banks, a construction contractor in Riverside, said he received three calls late last week to renovate foreclosed homes.

Banks has in the past bought homes himself and rehabilitated them for sale, but now says that business is poor.

“You can buy them, but you can’t sell them,” he said

Rehabilitating homes that financial institutions own is the current trend for people in his line of work, he said. A typical rehabilitation runs from $12,000 to $15,000 and can include painting the home inside and out, putting in new floor coverings, patching and repairing walls, and minor electrical and plumbing work, such as replacing a faucet. Occasionally a home will need a roof, he said.

Meanwhile, Brossie Cerniglia, who owns and operates The Pool Doctor in Corona, said he sees a lot of possibilities for his business in a foreclosure market. His company whitens plaster and cleans pool tiles.

Cerniglia estimates that on about 70 percent of the homes he works on, the owners are preparing for sale. In just the past week, traffic to his Web site has doubled.

He also has been trying to contract with banks that hold foreclosed homes.

“Then I’d be working for a long time out here,” he said.