ROBERT SIEGEL, host:
From NPR News, this ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, host:
And I'm Melissa Block.
Drug enforcement agents are seeing a spike in a lucrative cottage industry: residential marijuana operations.
Grow houses - also known as grow ops - are fairly common around the country, but the business is really booming in Seattle. And as NPR's Martin Kaste reports, investigators there say the home mortgage industry deserves part of the blame.
MARTIN KASTE: Meet Peter Truong. He's a community service officer for the sheriff's department in Seattle. And lately, he's been feeling overworked.
Mr. PETER TRUONG (Community Service Officer, King County Sheriff's Office): A couple of weeks ago, I turned my cell phone off, I turned my home phone off, because I got so tired.
KASTE: Truong is in demand because he speaks Chinese and Vietnamese — also spoken by most of the people who've been busted in marijuana grow houses around Seattle. He guesses he's helped to interview more than 200 suspects, most of them quiet people who hardly seem to fit the drug dealer profile.
MR. TRUONG: You'll never know. You'll never know because they live normal life. Truly nice people. Really polite. So you'll never know what's inside.
KASTE: Truong says the only telltale that he's ever noticed is the skin rashes that some of the suspects get. He says it must be the chemicals or some other side effect of living in close quarters with hundreds of marijuana plants.
These underground hot houses are being found in some respectable Seattle suburbs.
(Soundbite of rain)
KASTE: On a typical rainy afternoon in the city of Renton, DEA special agent Clark Leininger is getting ready for yet another stakeout.
Mr. CLARK LEININGER (Special Agent, Drug Enforcement Agency): You have to get a comfortable car and you have to have all your accoutrements because you need like a pillow for your neck because you don't want to get a neck cramp.
KASTE: Leininger spends a lot of time parked outside of ranch houses and split-levels which he knows to be stuffed to the rafters with pot. But instead of making a bust right away, he often holds back, trying to identify the bigger network.
Mr. LEININGER: Most of these people who are orchestrating and operating these grow operations have multiple houses. Some of the investigators say there are a minimum is three, sometimes there are five. The largest number that I've run into was 12.
KASTE: Leininger says the growers prefer to own their houses because it eliminates the risk of a nosy landlord. He investigated one grow house manager in this neighborhood who clearly had no trouble buying.
Mr. LEININGER: Many of the loans were zero-down, no-document loans. He did not have any employment and he was able to purchase - I think, if I remember correctly - about $6 million worth of property, and he didn't have a job.
KASTE: It's a business model imported from British Columbia, where the grow house industry is far more advanced. Ken Frasier is with the Financial Institutions Commission, a Canadian entity that investigates, among other things, crooked mortgage deals. He says mortgage brokers there just are not looking closely enough at who's borrowing.
Mr. KEN FRASER (Executive Director, Investigations, Financial Institutions Commission): And they'll simply pass paper. So that they will get an application from an individual, they won't check it out, they'll simply forward it on.
KASTE: And many growers have found the same loose standards in the U.S. as they shop for houses in the suburbs of Seattle. Federal prosecutor Sarah Vogel says it's clear to her that lenders have not been asking enough questions here either.
Ms. SARAH VOGEL (Federal Prosecutor, Seattle): It seems like, in some cases, applications didn't have true information on them, or perhaps in other cases nobody bothered to call. Or perhaps in other cases, people just pay a higher interest rate in order to not have somebody check up on them.
KASTE: Just how much background checking a lender does is a private matter. But county records show that many of the houses confiscated for marijuana production around Seattle were bought with variable interest-rate loans or small down payments.
Mr. STEVE HEANEY (Chapter President, Washington Association of Mortgage Brokers): Can we tighten it up? Absolutely.
KASTE: Steve Heaney is president of the chapter of the Washington Association of Mortgage Brokers that covers Seattle southern suburbs where many of these houses are being found. He says the rules are already getting stricter because of the subprime mortgage meltdown. But he also warns against an overreaction.
Mr. HEANEY: The fine line we walk that I don't think anybody in my industry — other than the bad guys, and I believe they're a very small percentage - you know, really want to facilitate the drug dealers. But if we eliminate completely loans with alternative documentation, there's certainly a lot of legitimate Americans that are not going to be able to buy a home.
KASTE: And, legality aside, it's hard to argue with the marijuana growers' investment instincts. They certainly had little trouble keeping up with their payments and since they've been raided, some of the houses have sold for a lot more than the growers paid for them. One even went for twice the price.
Martin Kaste, NPR News, Seattle.