After sitting in months of meetings with housing activists, housing counselors, and elected officials who couldn’t answer some of my questions about how foreclosure auctions work, I decided to take a more direct approach and visit the foreclosure auctions in San Francisco to learn for myself.
When and Where
The foreclosure auctions in San Francisco take place on weekdays on the steps of City Hall, 400 Van Ness Ave, except in case of really bad weather when they apparently move to the Green Room in the San Francisco War Memorial Building (I didn’t experience the bad weather move). The timing of the auction is almost always 2:00pm.
I arrived early on March 6, 2012, hoping to chat with an auctioneer before the auction began.
Instead, I ran into one of the investors who purchases properties at the foreclosure auctions. I asked him whether I needed to sign up to participate in the auctions and he explained that I don’t have to sign up, but if I want to bid on an auction, I have to show identification and have a cashier’s check ready for the amount of at least the opening bid the auctioneer mentions for that property. I wasn’t clear if you have to have a cashier’s check for the entire amount of your bid… I suspect that is handled in some kind of settlement process afterwards, but that’s getting ahead of the story.
Postponements and Cancellations
This investor told me that, of the dozens of auctions usually scheduled for each day, about 95% get postponed or canceled for various reasons, such as bankruptcy. In fact, one of the foreclosure databases listed 20 properties scheduled for auction that day and the auctioneers ended up auctioning off four of them, two of which reverted to the banks because no one was willing to match the opening bid, but I’m getting ahead of the story again.
I asked where I could find out which properties the auctioneers will auction and he replied that there are various services that list foreclosure auctions for San Francisco, including possibly also the office of the San Francisco Assessor-Recorder. I have to check on that.
Auctioneers and Investors
While we were talking, three auctioneers and a total of eight people who appeared to be investors, including the one with whom I was chatting, showed up for the auction. Only three or four of the people attending the auction actually bid on any of the properties, but that’s getting ahead of the story again.
By the way, some of the people who seemed to be investors expressed support for the Occupy movement and for preventing the banks from evicting some people from their homes. Some of them just thought some people didn’t deserve to stay in their homes.
Trustee Companies and Auctioneer Employers
One of the auctioneers explained to me that she works for LPS, which another person there told me stands for Lender Processing Services, which he said is owned by a large corporation called Fidelity National Title, which he said processes titles on all or almost all homes. (I later investigated further Lender Processing Services and Fidelity National Title.) The auctioneer said that title companies hire LPS to handle auctions for them.
To the uninitiated, the auction process is a little bit confusing because the auctioneers read off a lot of information to which no one seems to really pay attention. But then, they get to the core of the matter with the actual bidding on and sale of the property.
The first auctioneer told those in attendance that he had only postponements to read and he went off a little bit a way on the steps to read the postponements, which no one found very interesting.
The second auctioneer read off some postponements, then started the auction for a property at 162 Randall Street. He started the bidding at $693,200. He qualified one bidder who showed him identification and a cashier’s check, probably for the amount of the opening bid. I believe that only that one investor named Jim bid “plus 1 cent” above the opening bid. The auctioneer asked for other bids and seeing none said “accepting no further bids” which is auctioneer lingo for the property is sold to the last bidder.
The third auctioneer identified herself as Terry Redmon. She’s the one who said earlier that she works for LPS. She also read off some postponements, then eventually auctioned off three properties.
The first property she put up for auction was 2 Garnett Terrace. None of the investors tried to qualify to bid for that property and the auction returned the property to the bank.
The next property the auctioneer put up for auction was 363 Wilde Avenue, which generated the most investor interest of the day. Three investors, that guy Jim, Victor Kwong (not sure of spelling), and Lydia Liu Fong qualified by showing identification and a cashier’s check in at least the amount of the opening bid, which was $287,724. After dozens of bids, mostly in increments of $100, Lydia Liu Fong ended up with the top bid at $307,000 and purchase the property at auction.
The final property the auctioneer put up for auction that day was 708-710 8th Avenue with an opening bid of $742,861. None of the investors tried to qualify to bid for that property and the auction returned the property to the bank.
Unconscionable Advantage and the Law
One of the other people there, who appeared to also be an investor although he didn’t make any bids on any properties that day, told me that those who engage in real estate transactions are required to follow regulations of the Department of Real Estate which he said have “the force and effect of law”. He mentioned the concept of unconscionable advantage, which I’d like to investigate further.
When I asked him which laws cover the foreclosure auctions, he said it was law originating from hundreds of years ago. I asked if there are state or federal laws on the books and he couldn’t answer, so there is another research project.
I later found out that the first property sold that day at 162 Randall St. is a two-unit building built in 1904 in Glen Park only about eight blocks from where I live in Bernal Heights. The trustee for the foreclosure of the property was Cal-Western Reconveyance Corp. The opening bid of $693,200 was well above the estimated value listed in the foreclosure database of $542,254; however, that same database listed an estimated total loan balance of $1,015,500 with Wells Fargo, an estimated bid of $1,185,848, and no opening bid. I think that means that the property was “under water” with the current value of the home quite a bit less than the amount owned on the loan.
The second property at 2 Garnett Terrace is a condominium in Bayview. The trustee for the foreclosure of the property was Quality Loan Service Corp. The opening bid of $287,034 was well below the estimated value listed in the foreclosure database of $694,395; however, that same database listed an estimated total loan balance of $350,000 with BAC Home Loans Servicing, an estimated bid of $371,673, and no opening bid. I’m not sure if the winning bidder on an auction has to pay the purchase price they bid plus the amount due on the loan or just the purchase price. If just the purchase price, then it would seem that the investors passed up what would seem to be a good bargain on this property, so it’s unclear to me what is really happening with this one.
The third property at 363 Wilde Avenue is a single-family home in Visitacion Valley. The trustee for the foreclosure of the property was California Reconveyance Co. The opening bid of $287,725 was well below the estimated valued listed in the foreclosure database of $439,408; however, that same database listed an estimated total loan balance of $636,800 with JP Morgan Chase, an estimated bid of $628,498, and no opening bid. The winning bid of $307,000 would seem to be a good deal for the purchaser.
The fourth property at 708-710 8th Avenue is a two-unit building built in 1900 in the Inner Richmond. The trustee for the foreclosure of the property was Regional Service Corp. The opening bid of $742,861 was well below the estimated valued listed in the foreclosure database of $850,684; however, that same database listed an estimated total loan balance of $685,500 with Wachovia (Wells Fargo), an estimated bid of $734,373, and no opening bid.
For each of these properties, I will try to contact the people who live(d) there to hear and report their stories about the situation.
Photos and Video
The first seven photos I took of the March 6, 2012, foreclosure auction and Peter M. took the remaining 11 photos of the February 6, 2012, foreclosure auction:
You can view a video of part of the San Francisco foreclosure auction on February 6, 2012. Two of the same auctioneers and several of the same people who seemed to be investors were present at that foreclosure auction. The auctioneer named Terry provides her account of the Occupy Bernal protest that halted the foreclosure auctions on January 20, 2012, as part of the Occupy Wall St West actions that took place that day.