California Stifled With Foreclosure Auctions

January 9th, 2008

Monday broke all records in California. In the auction melee as many as 5,238 houses were waiting to be sold across the entire state. For a single day it was an unprecedented record. A year ago there were 400 to 500 auctions daily. By the end of 2007 the average rose to 2,500. But nothing like last Monday has ever happened before. However it has been remembered that the courts opened after the holiday season that lasted two weeks.

In Stanislaus County there were 145 houses listed – the number being double the normal figure. During the last 6 months the average was 60 to 80 auctions per day. But the number is increasing by leaps and bounds. Nearly half the houses had been postponed for Christmas by a mutual understanding between both concerned parties. In some case the house owners had filed bankruptcy.

Delays are common in the foreclosure process. It can close within four months or drag on for more than a year. First the lender files a default notice as a warning. This is followed by a notice of trustee sale that fixes the auction sale. The latter is the final step. In the local newspapers such notifications have become common.

In downtown Modesto 10 spectators turned up. Some had cash in their pockets – ready to buy. But during the first hour and a half not a single house was sold. It was not good news for lenders who were left stranded with these units that did not generate money. Most of the sub-prime mortgages had been contracted in 2005 and 2006. The borrowers are now finding that the property is not worth the loan amount.

More and more houses are rolling into the auction bids but there are few bidders or takers. As real estate prices continue to fall buyers are jittery about the ground they stand on. How to gauge a good deal under these conditions? There are other constraints. Antonio Lima had come prepared to buy a house in Modesto. He had inspected it and was satisfied. But at the last minute the auction was postponed. Jeff Black of Oakdale had come to buy his neighbour’s house but that too was postponed.

Experts opine that it is risky to bid at auctions. One does not know what is inside and there is no guarantee that the property is free from other liens like taxes.