State sees record number of homes go to foreclosure auctions, tracking firm says

Monday was a record-breaking day for foreclosures in California.

A staggering 5,238 properties were scheduled to be sold in auctions on courthouse steps across the state, including 145 in Stanislaus County.

"This is the single largest day ever for foreclosures," said Sean O'Toole, owner of ForeclosureRadar, which tracks mortgage defaults throughout the state.

By comparison, 400 to 500 auctions a day were scheduled statewide a year ago, O'Toole said. That average rose to about 2,500 per day by the end of 2007, but he said there's never been nearly as many auctions as happened Monday.

In Stanislaus County, for instance, about twice as many properties were scheduled for auction as normal, said Da-vid Absher, president of Dual Arch International, which does most of the foreclosure auctions in the county.

Absher said that during the past six months, typically 60 to 80 auctions were scheduled a day, but "the volume is mounting."

That's true statewide.

"January is going to set a very definite record in the number of California houses sold at foreclosure auctions," O'Toole warned. He said foreclosures throughout the state soared during 2007, and "all records were shattered for number of homes sold and for value (of mortgage defaults)."

O'Toole expects the number of scheduled foreclosure auctions to continue to climb in 2008.

Monday's auction list was so long primarily because it followed the two-week holiday season, O'Toole and Absher said.

"Some banks don't want to foreclose during Christmas," said O'Toole. He said many mortgage officials take time off during December, so they put off foreclosures until their return.

Nearly half of the Stanislaus County properties scheduled for auction Monday had their foreclosures postponed, mostly by mutual agreement between lenders and borrowers or because the homeowners filed for bankruptcy protection.

Such delays and postponements are common during the foreclosure process, which lasts a minimum of four months and can be drawn out more than one year. The process starts with the lender filing a "notice of default" to warn borrowers they are in jeopardy of losing their homes. That's followed by a "notice of trustee sale" that sets the auction date. The auction at the county courthouse is the final step.

Default, sale and auction no- tices are printed daily in The Bee's classified advertising section.

About 10 people showed up Monday to watch the auction in downtown Modesto, including a few who came with money to buy. But during the first 90 minutes, none of the auctioned homes attracted bids.

That means those lenders are stuck owning the properties they foreclosed on. Most of them, whose defaulted mortgages were issued mostly in 2005 or 2006, are owed more than the houses now are worth.

Another set of homes will face foreclosure auctions today and every weekday this month in Modesto and at courthouses across California.

Although an abundance of homes in all price ranges are facing foreclosure in the Northern San Joaquin Valley, fewer and fewer bids are being made at foreclosure auctions, Absher said.

"No one wants to buy this stuff because they don't know where the housing market's going," Absher said. "When the prices are continuing to slide down, how do you know you're getting a good deal?"

Antonio Lima was looking for a good deal at Monday's auction, but the Modesto house he came prepared to bid on had its foreclosure postponed. He's seen the inside of that home, and he's convinced it's a nice three-bedroom house.

That Norman Way property, however, has an outstanding mortgage of nearly $300,000.

"I know for sure they'll never sell it for that much," Lima said. He plans to make a lower-priced offer on the house through a real estate agent.

Another person at Monday's auction was Jeff Black of Oakdale, who came to see how much a neighbor's house would sell for. That foreclosure, too, was postponed.

"I don't know very much about this," Black said about foreclosure auctions. He said he'd be interested in buying the Valley Springs Drive home if he could get a good deal. "But the price posted (on the foreclosure notice) is more than I'm willing to pay."

Most people should be leery of bidding at a foreclosure auction, warned Absher: "For the average person, it's the most dangerous way to buy a house."

That's because houses bought on the courthouse steps are sold "as is" with no warranties and no title insurance. Buyers don't get to inspect the house before buying, and they don't get any guarantee that the property's title will be free from tax liens or additional mortgages.

Bidders must bring a cashier's check for the full purchase price to the auction and show it to the auctioneer before they are allowed to bid. And the minute bidding is done, the debt must be paid in full.

"The reality is, it's a very risky proposition for anyone," Absher said.

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or 578-2196.

This story was originally published January 8, 2008 at 3:43 AM with the headline "State sees record number of homes go to foreclosure auctions, tracking firm says."