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. Ike

    My brothers name is Ceasar...

    February 7, 2011 at 11:48 pm | Report abuse |
  2. John TN

    I purchased a new home in 2003. Purchased for 200,000 and lived there for 7 years. I made Bi-weekly payments and was 8,000 ahead on my mortgage. I wanted to move and listed my home for 3 years, added improvements just to sell it. I walked away last March and finally got an offer today. 148,000 and they want me to pay closing costs. I told my realtor the bank will have to forgive all non-payments or they can foreclose. I'm one of the millions in this position and I did everything right. When I hear the conservatives talk about repelling the financial reform bill I want to slug somebody. Can't wait to hear from the bank....

    February 7, 2011 at 11:52 pm | Report abuse |
  3. kevinkeller

    What is the best way to shop for a mortgage refinance? It is a good idea to contact at least three to five lenders for input on mortgage programs and rates. Also search online for "123 Mortgage Refinance" they found me 3.32% refinance rate really fast.

    February 7, 2011 at 11:55 pm | Report abuse |
  4. Pat

    John TN, slug a Republican and put him in ICU. The rest of the world will thank you!

    February 8, 2011 at 12:02 am | Report abuse |
  5. chrissy

    please enlighten me erib? tell me how they ruined our country??

    February 8, 2011 at 12:02 am | Report abuse |
  6. vance

    Thank's Kevin sounds great.Since you have a great credit rating will you co-sign for me.

    February 8, 2011 at 12:06 am | Report abuse |
  7. supertoy

    Chrissy- welfare, food stamps, affirmitive action. people that want something for nothing all because of the color of thier skin. the same people that give nothing back to society.

    February 8, 2011 at 12:17 am | Report abuse |
    • Sam

      Look how the "coloreds" have always politically messed up every part of the world for their personal gains starting from Christianity crusades to killing native American Indians to slavery to making and using nukes to oil conflicts to diamond conflicts ...

      February 8, 2011 at 12:46 am | Report abuse |
    • cm148

      not always, I was injured after 18yrs of working my ass off as a programmer. I qualify for special treatment because I am disabled. my special treatment exists because corporations discriminate against capable but disabled people, I just want a place on the starting line and a workplace that lets me work with my accessibility aids. the free market will not do that.

      February 8, 2011 at 1:09 am | Report abuse |
    • docserveralson

      Sam simply replies to simple stupidity does no one good. The Crusades were a response to Islam, which as the Arab Wars of Expansion had invaded Europe and was occupying Spain. The Arabs as Muslims began the series of conflict between Europeans and Arabs, or Christians and Muslims. They ARE "coloureds." But you ought to check out former white dominated nations in African and tell us how well the locals are managing things.

      February 8, 2011 at 2:30 am | Report abuse |
  8. camiwa

    For those who bought houses that they could afford and lost their jobs due to the economic crisis, no-one profits. It's a lose/lose situation, and they have my deepest sympathies.

    For those who made $40K and somehow thought they could by a $100K house for a $250K price (since the demand raised the prices) I WILL PROFIT!!!!

    At the time of the housing boom, I made $60K, but I knew that wasn't enough for me to afford the over-priced houses. Now I make $80K, and the houses are back to their ACTUAL value (or below).

    As soon as I feel secure in my job (after all, your greed has caused a recession that hurt EVERYONE, even those of us who weren't actually stupid; now all jobs are shaky), I will happily buy your house, for much less than you paid for it. Thank you.

    February 8, 2011 at 12:22 am | Report abuse |
  9. Tony G

    Here's the deal. It's all a plan that's working perfectly for the mortgage giants. They purposefully inflated prices through high pressured appraisals that made homes unaffordable once ARM's adjusted. That began the downward spiral to where we are now. As the crisis continued, the FHA bailed out many of the bad loans by insuring them for the banks. If you noticed, it was taking on average 12 to 18 months for a short sale to be approved. The banks were hoping you'd just leave and foreclose rather than do a short sale. In most cases it worked. So the lender forecloses on an FHA insured property, the FHA pays the lender 80 to 95% of the original mortgage amount. The lender then puts the house up for sale and ends up actually making a PROFIT when the house is re-sold. For example, the original loan was for $500,000 insured by the FHA. The home goes into foreclosure and the FHA pays the lender $400,000 because it was insured. The lender then puts the house back up for sale for $200,000 for a net gain of $100,000. Plan successful.

    February 8, 2011 at 12:31 am | Report abuse |
    • Shaw

      Wow that's incredible

      February 8, 2011 at 3:12 am | Report abuse |
  10. chrissy

    well can anyone tell me WHAT banks went under? the way i see it NONE of them did they just got bailed out with OUR money and they dont have to account for one red cent of it nor are they required to pay it back! i didnt get a say bout my tax $ did u?

    February 8, 2011 at 12:42 am | Report abuse |
  11. tonyL

    Life is not fair. Any investment carries risk. People making bad decisions and get taken by real estate brokers and mortgage brokers need to sue these people in court. Adults need to act like adults instead of children. It's a corrupt world with vultures trying to take advantage of vulnerable and dumb people. Banks, credit cards, mortgage companies, wall street brokers and thugs are no different then robbers and will sink to any level to make a buck at your expense. This is a capitalist system which we all live in and the rich and clever will always get ahead. That's just a fact.

    February 8, 2011 at 12:49 am | Report abuse |
    • docserveralson

      Yeah, but in this case, the President of the United States encouraged people to trust what seemed foolish. Bush did say that it was a time of great opportunity when all Americans can realize the American Dream of home ownership. I remember that well, because I couldn't believe he said it! When the government is part of the scam, the end is nigh. And it is STILL part of the scam, letting banks hold onto all that inflated paper and demanding bubble time real estate values remain while they got bailouts, etc.

      February 8, 2011 at 2:21 am | Report abuse |
  12. chrissy

    and i would be willing to bet some of them bankers are african american as well. it dont matter ur race what caused this recession was GREED and that comes in all colors! and to top that off china owns more of our country than we do!

    February 8, 2011 at 12:50 am | Report abuse |
  13. tonyL

    The whole corrupt game of mortgages for people who could afford these homes and mortgages started during Bush and Cheney with the help of wall street and banks. GOP believes in keeping poor where they belong and keeping rich where they belong. Just check the record and history. This will repeat again in next 20 to 30 years.

    February 8, 2011 at 12:57 am | Report abuse |
  14. chrissy

    im with u on this john tn u did do everything right and it aint fair! when u find one u wanta slug let me know ill hold em 4 ya!

    February 8, 2011 at 12:57 am | Report abuse |
  15. robbyn

    I was one of those who bought a home we could afford. We rented it for a few years then bought it. Life was good. Then illness, surgery, accidents happened.My husband got hurt @ work & was out for several months, i got sick & was out for several months. Long term disability insurance & workers comp don't cut it much. Mortgage company refused to work with us took our house aftr we lived in it 15years.

    February 8, 2011 at 1:03 am | Report abuse |
    • docserveralson

      And that's the American Dream, but it turns out to be a nightmare. No one cares. Seems like there's no use in trying. And some wonder why some hippies in the '60s saw from the start that it was a no win game. I just don't see how all this can go on very long. It's got to collapse from exhaustion. When it does, they'll be lots of necks for the old guillotine.

      February 8, 2011 at 2:13 am | Report abuse |
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