Foreclosure Auctioneer's Lonely Task

By Nick Miroff
Washington Post Staff Writer
Friday, February 22, 2008

With an unhurried stride and a fresh stack of mortgage loans gone bad, Rick Crossley arrived at the small plaza outside the Prince William County courthouse on a bright, windy morning recently and found it deserted. He cleared his throat, opened a thick folder and, with little ceremony, began to read aloud.

"This is a trustee's foreclosure auction," he announced. "Any parties with interest, please step forward at this time."

The deliveryman unloading packages nearby paid no attention; a sheriff's deputy gave little more than a passing glance. Crossley continued.

"Qualified bidders will have certified funds," he called out, and proceeded to offer a house in Woodbridge at $380,515.28.

"Going once! Going twice!" he bellowed, raising his voice in the gusting wind. "Final call! Sold to Aurora Loan Services for $380,515.28."

There was nobody from Aurora Loan Services, a subsidiary of Lehman Brothers, for Crossley to shake hands with or congratulate on the deal. Really, there was nothing to celebrate. The company had become the default owner of yet another piece of sinking real estate that it would have to resell.

Crossley auctioned several more houses over the next 20 minutes. One in Woodbridge was offered for $178,000, and another in Manassas for $244,000. It didn't matter; no one showed up. And by the time Crossley was finished, seven more Prince William houses had fallen on the foreclosure pyre, reclaimed by banks.

"Lot of interest out here this morning," Crossley muttered.

It wasn't always such a lonely job. When Crossley became an auctioneer two years ago for Purcellville-based Nectar Projects, foreclosure sales were few, and they would regularly draw packs of investors armed with cash and eager to bid. Now it's rare for anyone to show up. In the past three months, Crossley has conducted auctions on some 200 properties in Northern Virginia, and he has sold one.

"I don't know if people are afraid, or if they're not sure if we've hit bottom," he said, shrugging. "It seems like a good time to buy."

The Washington region has not been hit as hard as other markets by the wave of foreclosures, and its local impact has been concentrated in immigrant communities with lower-priced housing.

To map its course through Northern Virginia, one only has to follow Crossley on his Thursday errands. That's the day he makes his rounds at the region's courthouses, performing a grim but required step in the foreclosure process that allows banks to repossess houses whose owners can no longer pay the mortgage.

It is fitting that Crossley's circuit begins in Prince William. A survey by George Mason University's Center for Regional Analysis found that the county had 288 foreclosures per 10,000 housing units in December, the highest rate in the region. The county's land records office recorded 3,344 foreclosures in 2007 after tallying only 282 in 2006 and 52 in 2005.

This year, banks have taken possession of more Prince William houses. According to RealtyTrac, which sells foreclosure data to online subscribers, Prince William has 2,704 bank-owned properties on the market. Fairfax County has 1,852, despite having about three times as many homes as Prince William.

As prices have fallen over the past few months and the number of foreclosed properties has increased, Crossley has seen the ranks of bidders dwindle and then disappear. The small-scale investors who used to show up for auctions -- the "regulars" -- stopped coming months ago. "They say they're already carrying too many properties," Crossley said.

Crossley has been called the Grim Reaper by passersby and hecklers, but the sobriquet doesn't fit. In his typical auctioneer outfit -- running shoes and jeans -- the 55-year-old Arizona native looks more like a soccer dad than an undertaker.

"There's this image from 'It's a Wonderful Life' of the evil banker who wants to take your house," he said. "Banks don't want your house; they want your money. They want to work with you so you can keep your house. With the market like it is, lenders don't want to foreclose on you."

With no buyers, Crossley probably could cut corners or stay in the car. But he calls the auctions anyway, as the law mandates, drawing all manner of odd looks and stares. "It's weird," he said. "You never really get used to talking to yourself out there in public."

State law also requires that lenders give notice of foreclosure auctions in newspaper ads before reclaiming a property. They determine the auction's opening bid based on the amount they're owed. If no one steps forward with a higher offer, they assume ownership.

This explains one reason the auctions are so ill-attended: They no longer offer a reliably good deal. Banks typically set the opening bid at the amount they're owed, even though property values have plunged in some areas. For instance, a house in Manassas Park bought for $400,000 in 2006 might be worth $250,000 now, so an opening bid that doesn't reflect the reality of the market isn't likely to attract much interest.

"Banks bid what they're owed," said Bill Evans, a real estate lawyer in Manassas, "but once they become the owner, they'll sell it for less." This is because of legal requirements, obligations to other investors and other concerns that make it easier for lenders to cut their losses after the auction, he said.

Once they take over the property, he said, they'll "find a Realtor to get it moving."

But keeping tabs on auction notices can still be a path to a huge score. "Every once in a while, you see something good out there," said Lou Coletta, a small-scale investor who regularly checks the Nectar Projects Web site, and others, looking for bargains. "It's crazy. You can get a townhouse for $180,000 or a single-family in a decent neighborhood for $230,000."

Crossley and others in the real estate business said many borrowers are losing their homes because they are too confused or frightened to negotiate with banks to lower their monthly payments or refinance. Others have little equity built up, especially if they bought the house in recent years, and choose to walk away rather than be saddled with a devalued investment.

"I've got some sales lately on loans that were written in 2007, and I can tell from the original note and debt that [the owner] never paid anything on it," Crossley said. "But I've got sympathy for people who fall on hard times and lose their homes."

To Crossley's relief, the owners of the foreclosed properties aren't showing up at the auctions, either. In most cases, he said, they have vacated their homes, driven out by a barrage of threatening letters and intimidating legalese.

Because Nectar Projects handles foreclosures across Virginia, Crossley's auctioneering takes him to courthouses in small towns far down the Shenandoah Valley. The long drives on narrow back roads suit him just fine, he said. He likes the solitude, and he wards off boredom with books on tape.

"It's amazing what a beautiful state we live in," he said.

Still, most of his company's auctions are in Northern Virginia. On a Thursday this month, with auctions in Prince William, Fairfax and Arlington counties behind him, Crossley reached the historic courthouse in Leesburg at 3 p.m., with two Loudoun County houses to offer.

Once again, no one was there, but Crossley shouted out the auction anyway, his voice echoing off the building's thick white columns and red bricks. His only company was a statue of a Confederate soldier.

In a matter of minutes, the auction was over and Crossley's day was complete. Fourteen more Northern Virginia houses were now bank-owned, for better or worse.

"It's a crazy business," Crossley said, heading back to his car. "But it's real estate, so it's got to turn around sooner or later."