Going once, going twice

Sheriff’s sales spike reflects housing market

By JOHN MOLSEED, Messenger staff writer
Webster County Civil Clerk Marcia Vote didn’t need a news report to see the latest downturn in the housing market coming.

Vote handles the county sheriff’s sales of properties that have been foreclosed. When her workload spikes, the market has already slumped.

“When the economy gets bad, we get swamped,” Vote said.

Vote auctions off properties that have been foreclosed and sent to the Webster County sheriff’s office to be sold. The property is listed with a minimum bid from the bank that held the mortgage, but anyone willing to pay more can purchase the property at the monthly sale.

The properties end up in the sheriff’s office if a lender forecloses on property that the borrower has defaulted on the mortgage.

The system is set up to clear a property’s title so it can be sold without someone else making a legal claim of ownership.

By putting the property up for a public auction, it allows the borrower — or anyone — a chance to buy the property before ownership goes back to the original lender.

In 2007, Vote held 159 such auctions, compared to less than 100 sales in 2006.

Vote holds the auctions in the lobby of the Webster County Law Enforcement Center. Attendance is usually sparse. For most auctions, counting her, the total in attendance is one.

“Very rarely do you have anybody else come in,” she said.

Some people have seen the auctions as a chance to get cheap property and profit from it. However, the buyer assumes all tax liens on the property and are buying it sight unseen.

Vote advises people to do research and speak with an attorney before trying to make money buying foreclosed property at a sheriff’s sale.

“I think people realize you aren’t going to get a $60,000 house for $2,000,” she said.

Public notices of the sales are posted at the Webster County Courthouse and are published in The Messenger.

While all foreclosures go through the system, people having trouble meeting mortgage payments aren’t necessarily going to see their property end up on the sheriff’s block.

Communication is key, attorneys, lenders and loan agents say.

‘‘The sooner they talk to a lender, the more options there are available to help the borrower,’’ said Tom Chalstrom, president of First Federal Savings Bank of Iowa.

‘‘Lenders aren’t in the business to foreclose or take back property,’’ he said.

Each situation that can cause a person to fall behind on mortgage payments is unique, he said, adding that banks are flexible if they know the borrower needs help.

Lenders can modify the loan or work with the borrower on a plan to repay. This time of year, some borrowers ask for more time as they wait for income tax returns.

‘‘We want to be as open to all sorts of corrective action that works for the borrower and the bank,’’ Chalstrom said.

Even people who face rising mortgage payments because they borrowed at an adjustable rate can get help. An adjustable rate can seem tempting to a borrower when the housing industry is in good shape, but can spike quickly when the market takes a downturn.

‘‘Sometimes you’re better off going with a slightly higher fixed rate,’’ said Tammy Christy of Bradford Mortgage.

‘‘A lot of the lenders now are willing to help those clients by lowering that rate and fixing it for a time,’’ she said.

Lenders have a legal obligation to notify the borrower if they plan to foreclose on the property, said Mark Crimmins, an attorney who works with banks on foreclosures.

‘‘If the customers ignore it, then the bank has no other option than foreclosure,’’ he said.

Even if foreclosure proceedings have begun, borrowers can still keep it from ending up on the sheriff’s sale list by contacting their lenders.

However, silence is a guaranteed way to see the property on the sheriff’s sale list.

‘‘That’s the frustrating part from a lender’s perspective,’’ Chalstrom said.



Contact John Molseed at (515) 573-2141 or jmolseed@messengernews.net