Mass auction reveals depth of foreclosure crisis
291 homes on block in 2-day sale event
The foreclosure crisis in Massachusetts will be on display next month when nearly 300 foreclosed homes will be auctioned in a two-day blitz in Boston.
Major mortgage lenders and Wall Street investors that hold defaulted loans have hired Real Estate Disposition Corp. of Irvine, Calif., to auction 291 properties at the Hynes Convention Center Nov. 10 and 11, said Michael Schack, the auctioneer's senior vice president.
These sales join other large auctions the company has scheduled or has conducted in California, Chicago, Minneapolis, and elsewhere.
The properties to be sold, according to Real Estate Disposition's website, ushomeauction.com, are concentrated in Worcester, Hampden, Middlesex, and Essex counties. Many of the Essex County properties are in Lawrence and Lowell, cities hit especially hard by foreclosures of homes purchased during the housing boom by buyers who took out subprime mortgages, and then were unable to meet their monthly payments. Dozens of houses are also in Springfield and Worcester.
"This is really the tip of the iceberg," said Jon Gollinger, founder of Accelerated Marketing Partners, a Boston auction firm.
Subprime mortgages were targeted to working people, often minorities or immigrants, who had weak credit histories. The Federal Reserve Bank of Boston in a study this year identified subprime mortgages as causing the high rates of delinquencies and foreclosures in Massachusetts
Most foreclosed homes are sold at individual auctions, or farmed out to real estate brokers to sell on the open market.
In March 2006, auctioneer J.J. Manning held a mass auction of 26 Massachusetts homes. But the bulk of those properties were being sold by their owners or by builders who had trouble selling them as the housing market began to slow.
Some developers of large condominium projects have also staged auctions this year of units they were unable to sell. National Development this week said it would auction 30 unsold units at Skyline Condominiums in the Station Landing mixed-use development in Medford.
With the housing market in steep decline, particularly in neighborhoods with concentrations of foreclosed properties, auctions are considered a faster, more efficient way to sell, because buyers are given a deadline and the best price will be determined in a short bidding process. The benefit of auctions to lenders and investors is that they do not have to maintain the homes and can swiftly cut their losses.
Most of the properties lined up for the November auction, Schack said, are held by large, publicly traded lenders or Wall Street investment firms that bought mortgages from the original lender and are foreclosing.
According to county court records, among the firms holding foreclosure deeds for the properties to be auctioned were
Bidders interested in attending the auction will be required to register and bring a $5,000 cashier's check, as well be prepared to make a minimum 5 percent down payment if they are the winning bidder, Schack said.
Kimberly Blanton can be reached at blanton@globe.com.