Mass Auctions Indicative Of Foreclosure Intensity

October 16th, 2007

In just two days 291 foreclosed houses are going to be hammered down in Boston exposing the depth of the foreclosure malaise in Massachusetts. Real Estate Disposition Corporation has been hired by Wall Street investors to do the job. The company has presided over similar large sales in California, Chicago and Minneapolis as well as in other places. Another Boston firm is of the opinion that things have just begun – there are still more to roll in. Auctioneer Manning held a mass foreclosure auction of 26 houses located in Massachusetts. Their owners or developers who were facing difficulties due to a falling housing market were selling most of them. Promoters of large condo units held repeated auctions of properties they could not sell. National Development announced that they would push through 30 unsold units of Skyline Condominiums in auctions in Medford.

The foreclosures are concentrated in Worcester, Hampden, Middlesex and Essex counties. In Essex County the locations are in Lawrence and Lowell. Many houses in Springfield and Worcester city are also in the fray. These cities had been centers of the housing boom. Buyers had snapped up sub-prime mortgages at that point of time but with increasing rates they can no longer afford to pay. The result is foreclosure.

The sub-prime mortgages were launched with the laudable purpose of helping marginalized people like minorities, immigrants and those with bad credit. Unfortunately the plan backfired. The Federal Reserve Bank of Boston has concluded that sub-prime mortgages are responsible for this foreclosure fiasco.

In those areas where there are large concentrations of foreclosed units the housing market price has been on a steady decline. Here, foreclosure auctions are considered to be the fastest and best way to sell because buyers cannot sit on the fence and are given a cut off date within which time to compete the process. Bidding decides the price. By swiftly disposing units in an auction the lender is spared the cost and hassles of maintaining foreclosed properties numbering some thousands.

Wall Street holds most of the properties that have lined up for November foreclosure auctions. The Wall Street investors had bought these units from original lenders who were now foreclosing.

Bidders at these foreclosure auctions are required to register and come with cashier’s cheques of $5,000. It is also expected that they will make a 5% down payment if chosen to be the wining bidder.

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