BEST OF TIMES IN THE WORST OF TIMES : For each personal financial disaster that leads to a foreclosure, there are realtors and auctioneers doing a booming business.

It wasn’t a dream house. Realtor Melissa Hyams knew that a few steps inside the front door of a vacant, earthquake-ravaged and foreclosed home in Encino.

“There were feces all over the floors and I had 100 fleas crawling over my knees. I just ran out,” she said. Hyams was there long enough to see caved-in ceilings, holes in the walls, broken windows and that “the house was sliding off the foundation.”

Hyams, hired by the bank that had foreclosed on the property, remembered that a marshal had just been called out to evict a man who was living here. “I thought no one could live there. I wouldn’t even let my dog stay in there,” she said.

Hyams arranged for exterminators to swarm the place, and two weeks later she went back. “I had to spray my legs with bug spray before I could walk in, and still fleas were jumping on my legs.” And yet the house, an area where well-kept homes sell for $500,000, is about to be bought as is by an adventurous-minded contractor.

Such are the wonders of the residential foreclosure trade.

Only two years ago, Hyams, an agent with Celebrity Properties in Beverly Hills, was referred to a mortgage lender who needed to sell a foreclosed home. That lender referred her to another bank, “and it snowballed,” she said. Now Hyams has six bank clients and is so busy she handles virtually only foreclosed homes. In 1994 she sold about 80 foreclosed properties, and she expects “another good two years” from this foreclosure boom.

For each personal financial disaster that leaves a home empty, the harsh fact is that every foreclosed property must be put back into the marketplace. And for the coterie of realtors and auctioneers handling this flotsam and jetsam of the Southern California housing market, the times are very good.

Numbers tell the story. In 1990, when aerospace and defense layoffs began the avalanche of a full-force Southern California recession, there were 5,600 foreclosed houses and condos in Los Angeles, Ventura, Orange, Riverside, San Bernardino and San Diego counties. In 1994 the number of residential foreclosures skyrocketed to about 50,000, according to TRW Redi Property Data.

While the number of foreclosures is expected to slow this year, the 500 mortgage lenders doing business in the Southland still worry that recent interest rate surges, plus fallout from the Orange County bond fiasco, will leave them with plenty of foreclosures to dump on the housing market.

One realtor who expects another frantic season of 12-hour work days is Ron Prechtl, with Century 21 in Northridge. A realtor for 16 years, Prechtl chauffeurs clients around in a big Mercedes-Benz sedan, as he drives with one hand and handles a cellular phone in the other to stay in touch with his busy office. In his spare time there’s his four-seater Cessna airplane to fly, but in the foreclosure trade, rest is not an option. Precthl has eight people working for him, including three agents, and in 1994 his office sold about 170 properties--half were foreclosures. Prechtl’s staff generated $750,000 in commissions in 1994, he says, and his share was about $200,000.

One new foreclosure listing is a two-story, six-bedroom, five-bathroom house with a swimming pool in the Tarzana hills. Spider web-like earthquake cracks line the pink-rose colored stucco facade, but there are tiled floors, spacious rooms, high ceilings and a hilltop view. The asking price: $747,500. Prechtl doesn’t know much about the former owner, except that when the home was bought at the peak of the market in 1989, the original mortgage was $886,700.

Prechtl strides into the airy kitchen. In the wall is a rectangular hole where an oven should be, nearby is a vacant space where the gas stove top once sat. There are two sinks in the kitchen, but the hot and cold water taps and the faucets are missing, and as Prechtl bends down to open some cabinets, missing too is the plumbing underneath both sinks.

“This is very typical. Actually they left more than many do,” Prechtl said. “They left the dishwasher and the trash compactor.” One mark of a foreclosed home is what the former owners stripped out of the place when they fled. “The whole attitude is to take it out on the lender,” Prechtl said.

House-stripping also happens in Beverly Hills. Realtor Hyams remembers a 6,000-square-foot foreclosed mansion in Beverly Hills that she put up for sale at $1.7 million. The place had a tennis court, but it didn’t have much light. “They even took the light switches, and electrical plugs. It’s a 49-cent device. They took the toilets too, and all the sink fixtures,” Hyams said. At other foreclosed homes, “I’ve had air conditioners and hot water heaters taken out. I’ve had liquid cement poured into the plumbing. I don’t like to even say that because it gives people ideas.”

Of course, no matter how gifted a realtor is, they can’t sell a foreclosed property until they literally have possession of it. Handling evictions and being tough is just part of the job for Steve Johnson, with Prudential California Realty in Torrance. He started handling foreclosures six years ago and they now account for 70% of his business. His four-person office generated a combined $400,000 in commissions in 1994, he said, up 25% from a year earlier.

Johnson’s team re-keys a foreclosed home, hauls out trash, boards up windows, pays the gardening bills and, if the bank OKs it, makes repairs, and places ads and chases down buyers. But often his first chore is to clear out anybody still living inside.

“I take control from the moment I get there. Their first question is always, ‘How long can I stay?’ I always says, ‘You have to be out as soon as possible,’ and I keep repeating, ‘You’ve got to be out as soon as possible,’ ” he said. If they don’t move in a few days, Johnson calls in a marshal to evict them. That happened twice last year, and one case was a tough go.

“A son was trying to stay in the property for his family. Oh, we get all the threats, ‘I’m gonna sue.’ In that case, I didn’t allow him to make a phone call. I told him to go to a pay phone on the corner and said you’ll have to make arrangements with the contractors and me to take your things out. And it worked out fine,” Johnson said. The man came back a few days later to collect his things.

If realtors deal with foreclosures long enough, these sad stories pile up, and they become a bit case-hardened, like surgeons working on a battlefield.

One heart-wrenching hard-luck story Prechtl tells is about a husband and wife who lived in a Granada Hills home for 20 years. But the husband lost his job and he had medical problems, so “they refinanced their home to pay his medical bills.” His health didn’t improve and neither did the family’s finances, so they lost the house.

Hyams’ tells of the divorced wife of a famous actor. “She had a beautiful home up in the Encino hills, with city views, a beautiful pool. She got the house in a divorce settlement and owned it free and clear.”

At the market’s peak, the place was worth $1 million. Then she went into debt to loan money to a son-in-law who wanted to invest in real estate, and promptly lost it all, then the bank foreclosed.

“She didn’t damage anything,” Hyams recalled. “She left notes all over the house saying, ‘You might want to check the leak under this sink. I’m sorry that I had to leave it in a mess, but I had to move myself out in a station wagon.’ That woman was 60 years old and probably lived in this house for 30 years. This home was the one she probably planned on dying in.”

In the foreclosure trade you see all sides of human nature, the realtors say. Ron Garber, an agent with Re/Max Realty Associates in Anaheim Hills, has six people working for him, and in 1994 his team sold over 200 properties--about 75% were foreclosures. One foreclosed house, though, was a tough sell.

The property was in Buena Park. The former owner had a criminal background, Garber learned from the police, and the guy was stripping-out the home. “He was taking cabinets and fixtures,” Garber said, when the bank took it over. Garber fixed up the house to ready it for sale when somebody, “went back in and stole stuff and rolled out new carpets.” Finally a buyer was found and the house was about to be sold, but Garber didn’t want any more intrusions, so he hired a security guard who “slept in the property for a week while we were closing escrow.”

The foreclosure market has also been a bounty for Larry Latham Auctioneers in Scottsdale, Ariz., who auction off the Housing and Urban Development Department’s hard-to-sell foreclosed homes. These are properties where a federal agency guaranteed the original loan, and when the homeowner missed payments, Uncle Sam moved in. Last year Latham auctioned off 1,600 foreclosed HUD homes in Southern California, from Santa Barbara to San Diego. “These kind of properties need some attention,” concedes Randy Lynch, who heads Latham’s California operation. This means the homes are boarded up, often vandalized, and sold as is, some for only $35,000. Bidders, Lynch says, must be pre-approved for a loan, but they can often move in with only a 4% down payment.

Lynch rarely goes out to see these homes, they are just addresses on a piece of paper, but he knows that every home up for auction “represents a sad story for somebody.” But Lynch prefers to look at the present, not the past. “We’ve put a lot of first-time home buyers into properties. Single mothers bought homes for less than they were paying in rent. It’s a good feeling,” he said.

Foreclosed homes, it turns out, have a certain cachet, and draw buyers like shoppers to a bargain basement sale. Maybe it’s because realtors run newspaper ads with trumped-up headlines such as, “Bank Repo! Steal of a Lifetime!” What’s odd is that the agents who actually sell these foreclosed homes say that while banks occasionally accept a low-ball offer, most times a foreclosed property is fairly priced. “But I have people call me all the time saying ‘I want a bank-owned property,’ ” said Johnson, the Torrance agent.

One who went hunting for a foreclosed home last year was Howard Hancock. His finances were a bit shaky, he says, and as the father of two who was about to marry a woman with three children of her own, “to keep costs down, I was looking to own a foreclosure.”

His realtor, Ron Garber, found a two-story, five-bedroom home in Whittier, but warned Hancock that it wasn’t going to make Architectural Digest. “People had left trash everywhere, old furniture, cigarette butts, beer bottles. Virtually every room in the house was buried in garbage,” Hancock said.

But underneath the grime Hancock could see a house that was structurally sound. “I said if there’s anyway we can afford it, I want it. My (fiancee) thought I was crazy” The bank wanted $145,000, and Hancock agreed, mostly because the bank offered him a no-down payment loan.

Then Hancock and 20 friends went to work, painting and fixing windows, redoing the bathrooms.

Last July Hancock’s new family moved in. Living in a home that was a disaster for someone else doesn’t bother him. “I feel sensitivity” for whomever suffered there, he said. “But it’s perfect for me.”