Who profits from foreclosures?
Hundreds were at Manhattan's Sheraton New York Hotel on January 29 for an auction of bank-owned foreclosed properties.
February 7th, 2011
06:41 PM ET

Who profits from foreclosures?

By all accounts, the nation is still in the midst of a foreclosure crisis. In 2010, foreclosure activity increased in 149 of the nation's 206 metropolitan areas with a population of 200,000 or more, according the foreclosure tracking company RealtyTrac. Last year, more than 2.8 million homes in the U.S. had foreclosure filings.

But one man's loss is another's gain. Foreclosed homes are often up for sale at bargain prices. Some businesses and property owners have used that to their advantage and are finding ways to turn a profit on properties that have depreciated in value and have been repossessed by banks.

Auction.com held more than 600 auctions of foreclosed properties last year. "It's truly what we call the perfect storm of opportunity," said Trent Ferris, the company's vice president of auctions.

On the last Sunday in January, a few hundred people filled a ballroom at a hotel in Midtown Manhattan to bid on more than 140 foreclosed homes in New York, New Jersey, Connecticut and Pennsylvania. As an auctioneer called out for bids at a blistering pace, the homes sold for a fraction of their fair market value. Each auction took about one minute, and Auction.com received a fee of 5 percent of the sale price on each house.

"At this particular point in time, nothing good comes from the empty house that's sitting there," Ferris said. "So by giving people the opportunity to buy at auction price to turn that empty house back into a home is absolutely phenomenal."

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Filed under: Auctions • Economy
soundoff (104 Responses)
  1. Cesar

    Thank you CNN and smart bloggers. Who profits from foreclosures? Land lords with cash at hand, and banks.

    February 8, 2011 at 7:14 am | Report abuse |
  2. Mel

    True that Cesar,True that!

    February 8, 2011 at 11:43 am | Report abuse |
  3. chrissy

    so hannah i dont hate bush or palin. he ticked me off when he took our tax dollars & gave it 2 the banks without no agreement 2 pay it back or accountability & palin probably is a nice person but politically shes dumb as a post & just a puppet 4 tea party

    February 8, 2011 at 5:15 pm | Report abuse |
  4. audrahaney

    Interest rates are simply incredible on mortgages right now. It's not uncommon to see 30 year rates down in low fours and 15 year rates in the threes. Week after week, the rates keep dropping If you are looking for rates in three then search online for "123 Mortgage Refinance"

    February 9, 2011 at 5:55 am | Report abuse |
  5. Tom Joad

    The big banks could only get away this this stuff in a nation of sheep. The bailed out, predatory- lending, robo- signing shysters would be run out of town in most other countries. The assault on the lower and middle class in this country has been swift and complete. Thanks to the Grand Oil Party for taking us down the drain. I hope you some day pay dearly. The "limousine liberals" now in charge aren't much better.

    February 10, 2011 at 10:07 am | Report abuse |
  6. Josh

    A company actually working to put families back in to distressed properties by owner financing them. http://www.rebuildus.com – Your thoughts?

    April 8, 2011 at 2:26 pm | Report abuse |
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