

How deft bid-riggers harmed ex-owners of foreclosed homes - aceperry
http://www.sfgate.com/crime/article/How-deft-bid-riggers-harmed-ex-owners-of-5602103.php

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jack-r-abbit
The article kind of contradicts itself. At one point it makes the following
claim (which is also implied by the article title):

 _The foreclosed homeowners are the ultimate victims of the bid-rigging,
federal investigators said. Any money earned at auction beyond the debt owed
on the house is supposed to be returned to the former owner._

But then goes on to say:

 _As banks felt the burden of holding so many homes, they held a fire sale and
began asking even less than what was owed on the properties. In 2009, the
average asking price dropped 57 percent below what was owed on the homes,
according to Property Radar. These heavily discounted homes flooded the
auctions._

If the bank is getting less than they are owed then the foreclosed homeowners
were never going to see any money anyway since there was no _extra_. Those
homes were going to be purchased below debt level regardless of who was
bidding and whether they were going to flip it right away to "the Group."
Banks are not in the real-estate business. They are in the money business.
Most foreclosure sales are the bank trying to cut its losses. They can write
off a few grand easier than a few hundred grand.

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ChuckMcM
Seems a shame to put people ripping off banks in jail, but not bankers ripping
off people.

That said, I attended a couple of the forclosure auctions in San Jose and it
would be clear to a elementary school kid that _something_ fishy was going on
amongst the bidders. But like it said in the article, there isn't really a
whole lot of rule making here as far as I could tell.

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FireBeyond
And by ‘ripping off banks’ you also mean ‘ripping off people who’ve also lost
their homes’, right?

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ChuckMcM
Actually no, that is not what I mean.

I do understand that at the heart of a foreclosure there is someone who lost
their home, but by and large these are 'mortgage meltdown' foreclosures. There
is negative equity in the house (its worth less than the note on it). In every
instance I've seen (but acknowledge that isn't all) the original purchaser is
no longer making payments (either they can't afford it or they choose not to
make payments on a house that is worth less than the mortgage) and so the
original purchaser is just waiting for the loan forgiveness. They are going to
get that out of the transaction no matter what.

