Opinion - Occupy Atlanta takes a simplistic view of foreclosure sales
Auctions of vacant homes help the public, not hurt
Last Tuesday, when I showed up to work, I was met with a hundred protestors. I don't lobby for oil, practice law for Monsanto, or test hairspray on bunnies. I am a real estate investor.
In Georgia, if you don't pay your mortgage — admittedly, it's often more complex than that — the bank has the right to repossess your home and sell it on the courthouse steps to recoup its losses. In order for banks to lend large sums of money at reasonable interest rates, they need to hold the home as collateral.
Once a bank decides to proceed with a foreclosure, it advertises the sale in the county's legal paper for four weeks and then hires an attorney to conduct a public auction. Anyone can bid on a property as long as he has cash to pay for it on the spot, which is why most bidders are small businesses. If the winning bid is more than the debt owed on the home, the excess funds go to the person losing the house. The buyer must wait for a deed, which can take up to six months, before beginning the eviction process — but it's usually not necessary; most homes are vacant at the time of sale.
Occupy Atlanta sees this process as a violation against humanity. I know how difficult things have been for many Americans. I also know that throwing families out of their homes looks bad. But I'm frustrated that all the news stories about last week's event were from the protestors' point of view. Reporting on peoples' emotions can certainly add context to a story, but emotions can cloud fact. And there are facts about the sale of foreclosed homes that may surprise a lot people.
First and foremost, if an investor does not buy the home, it goes back to the bank, not to the homeowner. It also "chills" the bid, meaning that the bidding stops at the bank's opening price. This hurts the person losing his home, as he has no chance of receiving excess funds from the auction. Occupy Atlanta didn't help anyone when they tried to prevent investors from buying homes.
Occupy Atlanta is asking for a moratorium on foreclosures. It is important to point out that it takes many months, even years, to actually sell a home at auction. One woman interviewed by reporters had received foreclosure notices for more than three years. It's unlikely that a six-month moratorium would give her the time she needed.
Occupy Atlanta claims housing is a right. But every month there are penthouses, country club mansions, and trendy in-town bungalows auctioned on the steps. These are the kinds of homes that investors are really after. Does Occupy Atlanta believe penthousing is a right, too?
Foreclosure investors are good for the community. Neighbors love us. We fix houses that are in disrepair; we pay homeowner association dues; and we settle back property taxes. Banks leave homes vacant, but we put families in them. We drive value up in neighborhoods that desperately need it.
Elizabeth Warren is a longtime real estate investor who lives in Midtown.