On the Auction Block in Californina - NYT - 6-10-07

Foreclosures have surged in Southern California in the last year, particularly in outlying areas.

In seven counties, lending institutions foreclosed on 6,007 properties in the first quarter of 2007, up from 721 properties in the first quarter of 2006, according to DataQuick Information Systems, a research company based in San Diego.

In Riverside and San Bernardino Counties, lenders foreclosed on 255 homes in the first quarter of 2006. That number grew to 2,369 in the first quarter of 2007, according to DataQuick.

After completing legal default proceedings, banks typically auction properties on the steps of county courthouses. Buyers have no opportunity to inspect the properties and must pay in full, in cash. The sellers do not have to guarantee that the title is clear of liens and additional mortgages.

The company presented every property for public inspection for three days, and it guaranteed title insurance as well. In addition, the company arranged for a lender to finance the deals, so that buyers did not have to pay cash for the full price.

Buyers paid the auction company a fee of 5 percent of the sale price for the first house, and 15 percent of the sale price on additional houses.