More than 70 percent of the scheduled auctions of foreclosed homes at three Towson-based auction houses were canceled last week as lenders continued to review paperwork for potential errors.
Online listings for residential foreclosures at Tidewater Auctions LLC, Mid-Atlantic Auctioneers LLC and Alex Cooper Auctioneers Inc. showed 238 of 338 auctions scheduled from Wednesday through Friday were called off.
Another Towson auction house, Harvey West Auctioneers, had upwards of 40 percent of its scheduled auctions canceled, according to Ron West, a spokesman for the company.
But West said he did not have an exact number, and that auctions normally get pulled for reasons like last-minute deals and sales, although the cancellation rate is usually under 30 percent.
“We have had more cancellations than you would expect in the normal course of a month,” West said. “But, we expect them to come back in not too long.”
Representatives of Tidewater, Mid-Atlantic and Alex Cooper could not be reached for comment.
Rick Weinberg, vice president of REDC, which operates Auction.com and organizes auctions across the country including Maryland, said cancellations are not a surprise. He said similar situations have occurred before.
“This is just what happened during the last moratorium in 2009,” Weinberg said. “Then, it didn’t do much of anything but clog the pipeline for awhile. The properties all came back.”
The withdrawals seem to have been confined to auctioneers with clients representing major lenders. A number of the auctions came from the law firms Bierman, Geesing & Ward LLC and Covahey, Boozer, Devan & Dore PA. The two firms have come under fire as investigation into the robo-signing foreclosure scandal continues. Attorneys at the two Maryland law firms admitted they had not personally signed affidavits in foreclosure proceedings. Notaries public who validated those signatures have had their commissions revoked by the Maryland secretary of state.
Last week also saw lenders scale back the number of foreclosed properties being actively listed for sale outside of auctions. On Tuesday and Wednesday, more than 100 active listings for foreclosed homes were pulled off the market. The auctions and listings are likely being pulled as lenders scour foreclosure paperwork for potential problems.
Federal regulators, the state attorneys general from every state and others have been going over foreclosures to see whether employees at banks and processing firms signed court documents that had unverified or false information in an attempt to speed up the process.
“There are a lot of wheels spinning right now,” West said. “The defaults are still there though, and that’s what needs to be remediated.”
According to foreclosure listing service Realty Trac Inc., the number of auctions in the state has been declining since Maryland changed its foreclosure law in July. In September there were 1,519 auctions compared to 3,254 in August.
The number of foreclosures has declined in Maryland over the last few months, but a total of 14,087 properties were still in some stage of foreclosure as of the end of September. Experts said that, eventually, the foreclosed properties pulled from the auction and real estate listings will return.
“Like anything else, it’s not going to last forever,” West said. “Things will get in the system, and it will probably be a big splash when they do.”
With foreclosure auctions, often the mortgage-holding bank will take ownership of the property, which is then listed and sold through real estate agents, adding to the inventory of available homes on the market.
Deborah Ford, professor of finance and chairwoman of the department of economics at the University of Baltimore, said delays in the auction process, or a perception of problems, could stall recovery in the housing market.
“It just adds some reluctance to people who are thinking of buying houses out of foreclosure,” Ford said. “It puts a damper on things, and can drag this out even longer.”
Weinberg said auctions give people a quicker, less-expensive way to get into a home than a traditional sale. He agreed that getting people to buy homes that have not been generating revenues was a necessity.
“It’s terrible when someone loses a home in foreclosure,” Weinberg said. “But when it does happen, it’s equally important to get a new family into that property who’s paying mortgage and property tax. Turning those houses into homes is pivotal for the economy.”