This makes me sick! "The companies lost money when previous owners defaulted on mortgages, and want to recover as much as possible on the sales." BULL$HIT to that MYTH! Trolling for a whole new batch of mortgage servicing fraud victims, aren't you Countrywide? Many of these folks will get soooooooo MUCH MORE THAN THEY PAID FOR!
2000 bid on American dream
Foreclosures Sold at Auction
Melissa Ferreira came to Hynes Veterans Memorial Convention Center yesterday morning to buy her first house.
Almost 300 foreclosed Massachusetts houses will be auctioned at the Hynes this weekend. But Ferreira had eyes for only one: a 1,900-square-foot, three-bedroom house in the Bourne neighborhood where she grew up.
The 28-year-old newlywed, bidding with her grandfather at her side, raised her paddle repeatedly as the price rose to $330,000. When the auctioneer stopped rapping and Ferreira realized she had won, she wept.
"I'm an emotional wreck," she said. "I cried because I almost didn't get this house and this is my dream house. I paid a little more than I wanted to spend, but it was worth it."
This is what real estate fever looks like in a down market: Thousands of people gathered to bid on foreclosed houses.
The two-day auction is being conducted by Real Estate Disposition Corp., an Irvine, Calif., company that is holding similar events in other cities almost every weekend this fall.
The properties for sale are mostly remainders. The first attempt to sell a foreclosed property is immediate. Before the lender takes possession, it offers the house to anyone who agrees to cover the borrower's unpaid debt. If that doesn't work, lenders generally behave like any other sellers: They hire a real estate agent to market the property.
For many of the properties auctioned yesterday, that also didn't work.
"They don't tend to be in the best condition," said Terryanne St. Pierre, an associate broker with Taché Real Estate in Salem. She said her company had listed several of the houses being auctioned. "They've been abused more often than not," St. Pierre said.
Moldy basements, missing windows, burst pipes, and buckled floors are fairly common, the Globe found in touring some of the houses last weekend. The need for new paint is pervasive.
But the 2,000 or so people who attended yesterday's auction were undeterred. Registration was free, although each bidder was required to bring a cashier's check for $5,000. After each property was introduced, men in tuxedos rushed around encouraging people to spend money.
"Hey, that guy is about to buy your home!" one auctioneer told a hesitant couple. "What's another $10,000?"
Properties sold in a few minutes. Winners were escorted to a roped-off area to make a 5 percent down payment, for example, on a $300,000 house - the cashier's check plus a personal check for $10,000. They were then escorted to an area behind curtains to qualify for a mortgage loan from Countrywide Home Loans.
Countrywide, the nation's largest lender, has faced scrutiny as many of its borrowers lose their homes to foreclosure. This weekend, the company is attempting to sell some of those houses as part of the auction by Real Estate Disposition Corp.
Some bidders, like Ferreira, were searching for a first house. Others were looking for vacation homes or rental property. Most were aspiring developers; they planned to buy cheap, invest in repairs, and resell at a higher price.
A Victorian-era house on Washington Street in Norwood sold for $585,000 in July 2004. It sold yesterday for $350,000 to a group of four friends, investors who said none of them had seen it. They bought it, they said, because it seemed like a good deal.
The house has 2,800 square feet of space, with five bedrooms and a large backyard. Now, however, the polished wood of the living room floor is ruptured in several places, perhaps by burst pipes. The smell of a moldy basement permeates the house. Something with sharp teeth savaged the woodwork. The fire alarm chirps endlessly.
Real Estate Disposition was founded in 1990, but before this year the business had been dormant for a decade.
There was little need for its services during the real estate boom. The company's founders, Jeffrey Frieden and Robert Friedman, turned instead to selling undeveloped land. A company they founded, National Recreational Properties Inc., bought large numbers of lots in the Sun Belt, then marketed the properties in infomercials often featuring "CHiPs" star Erik Estrada.
By early 2007, however, lenders were encouraging the company to resume holding auctions, said Michael Schack, the company's senior vice president. Almost 5,000 properties in Massachusetts were foreclosed on from January through the middle of August.
"When the market goes down, we're there to help people sell," Schack said.
Over the next month, Real Estate Disposition plans to auction almost 1,000 houses in Houston, Dallas, Phoenix, and Las Vegas. Schack said the company sees demand continuing unabated for at least two years.
The firm is privately held and does not disclose its profits, but the company collects a 5 percent premium on each winning bid, along with fees it charges to property sellers. During the first hour of yesterday's auction, the winning bids totaled $3.6 million; total sales during the two-day auction could top $40 million.
The houses on the block are owned by lenders and investors such as Countrywide, the Wall Street investment bank Bear Stearns, and Wells Fargo & Co., a bank based in San Francisco. The companies lost money when the previous owners defaulted on their mortgages, and they want to recover as much as possible on the sales.
Bidding on some houses opened as low as $1,000, for 623 square feet in Bourne "with lots of character," for example. But there's an important caveat: The winning bid isn't binding unless it exceeds an undisclosed threshold set by the seller.
In most cases yesterday, the bidding quickly cleared that threshold, spurred by the antics of the auctioneers.
Chris Willis and Eli Sanchez wanted a vacation house on the Cape. They came to shop for bargains, but prices on the properties they liked quickly soared out of range. They were willing to pay $100,000 for a West Yarmouth ranch they considered a teardown. Willis, a Boston real estate broker, said the place looked good but had foundation problems.
The bidding soared past $100,000 in a matter of seconds. The place eventually sold for $200,000, leaving Willis shaking his head. "They're basically buying land," he said. "It makes no sense."
Willis and Sanchez left after an hour.
Mike Gubla, a New Bedford contractor, also decided that the prices were too high.
"There's civilians bidding here," he said, explaining that inexperienced buyers were paying more than properties were worth. "I'll come back next year, and the prices will be better," he said.
Others had better luck finding what they wanted.
John Silva, 64, paid $130,000 for a Brockton duplex he said was worth more than twice as much. Silva, who retired three years ago as the police chief in East Bridgewater, said he was looking for an income property to rent out. He said he planned to fix the place with his son, investing perhaps $20,000 in necessary repairs.
"Our intent was not to jump in," he said. "We were being cautious. But sometimes you just know that something feels right, and this was one of those times."
Ferreira, the newlywed, felt the same way.
She saw her dream house for the first time last Sunday, during an open house for prospective bidders. She said she spent the rest of the week nearly paralyzed by nervous anticipation.
Yesterday afternoon, her bid accepted on the house, she paced the financing room in high spirits, waiting for permission to leave.
She said she planned to drive to the house directly."And when I get there," she said, "I'm going to throw up my hands and tell anyone, 'This is mine!' "
Appelbaum can be reached at email@example.com.