Past own­ers owed money

Thou­sands of dol­lars are go­ing un­claimed af­ter houses sell.

The Denver Post - - FRONT PAGE - By David Migoya

County fore­clo­sure auc­tions have be­come the hottest in­vest­ment op­por­tu­nity in town, reap­ing tens of thou­sands of dol­lars in prof­its for the most un­likely peo­ple: the home­owner who lost the house.

Yet get­ting them to col­lect the money isn’t al­ways easy, the pub­lic trus­tees who track them down say.

The money comes from peo­ple who buy auc­tioned houses for more than what a home­owner owes the bank or lender who fore­closed. Once lawyers and any prop­erty liens are paid off, the home­owner who lost the house gets what’s left. It’s usu­ally a few thou­sand dol­lars.

Lately, though, it has been as much as $100,000 or more.

“Some are more than will­ing to claim the money, but oth­ers are hes­i­tant,” said Diana Spring­field, chief deputy pub­lic trustee for Ara­pa­hoe County.

“One guy came in re­cently to ask about (the money), and now we can’t get him to come back to col­lect it.”

The amount wait­ing for him: $27,692.

“We’ve never had any­thing like this. It’s crazy,” said Adams County Pub­lic Trustee Su­san Orec­chio, not­ing that auc­tion buy­ers are fre­quently pay­ing more than what a bank is owed for a prop­erty.

There has been a drop of 45 per­cent in houses sold at the fore­clo­sure auc­tion this year, Orec­chio said. But bid­ders have al­ready paid more than $3 mil­lion more than the banks were owed — a 77 per­cent in­crease over last year.

And it’s hap­pen­ing all over Colorado.

“In the past decade, most peo­ple owed far more on their loan than what the prop­erty was worth, so the bank usu­ally would sim­ply get the prop­erty back at auc­tion,” said Bran­don Turner at Big­gerPock­ets.com, a real es­tate in­vest­ment and net­work­ing site.

There were a few in­vestors who bought at fore­clo­sure auc­tions back then, but even fewer bid much more than what the bank was owed, records show. But a tight real es­tate mar­ket — the num­ber of houses for sale has been at his­toric lows — has made fore­clo­sures more ap­peal­ing.

“With the im­prov­ing real es­tate mar­ket, in­vestors are find­ing it more and more dif­fi­cult to find prop­er­ties that will pro­duce a profit,” Turner said. “Many, there­fore, are turn­ing to fore­clo­sure auc­tions to get deals.”

Den­ver de­vel­oper Del­west is one of them. In June, for ex­am­ple, the com­pany paid $285,000 for a Cen­ten­nial home at the Ara­pa­hoe County fore­clo­sure auc­tion — $73,278 more than what the home­owner owed the bank, records show.

The com­pany turned around and has the home un­der con­tract for sale at a $55,000 profit, ac­cord­ing to its web­site.

“The prices in the metro area have in­creased so quickly in three or four years that you have to go as much as 70 per­cent higher for prop­er­ties, and with the price-ap­pre­ci­a­tion go­ing up as well, you have to out­bid the big firms,” said Joe Min­nis, a part­ner in Del­west Cap­i­tal Group, Del­west’s re­de­vel­op­ment busi­ness, adding that outof-state in­vestors with cap­i­tal as­sets of about $500 mil­lion are their main com­peti­tors.

“We can bid up the num­bers since the mar­gins don’t have to be that big; we’re about vol­ume,” he said, not­ing Del­west buys about 60 fore­clo­sure prop­er­ties a year, re­habs them at a frac­tion of what oth­ers prob­a­bly pay and re­sells them.

And buy­ers are try­ing to outdo one another at a fran­tic pace. In Adams County last week, two bid­ders ran at a sin­gle prop­erty, within mo­ments driv­ing the fi­nal price up by $60,000 over what the home­owner owed the bank.

Since June 1, the Ara­pa­hoe County pub­lic trustee has auc­tioned 84 prop­er­ties, records show. Of them, 53 sold for amounts that ranged from $20,000 to more than $116,000 more than the re­main­ing mort­gage, records show. Only five have been resold since their auc­tion.

In Dou­glas County, where the num­ber of fore­clo­sure homes auc­tioned has dropped by 30 per­cent this year, the ma­jor­ity have sold for more than what the bank was owed, Pub­lic Trustee Chris­tine Duffy said.

Of 67 sales, she said, 42 brought in for more than what the home­owner still owed on them, three by more than $100,000.

De­spite the cash, trus­tees say some of the for­mer own­ers just won’t show up to col­lect money that is right­fully theirs.

“I can’t ex­plain to you why they don’t come for the money,” Spring­field said. “Some say the de­pres­sion is sim­ply too much to bear, hav­ing lost their home. But these are some pretty hefty checks.”

If no one claims the money af­ter six months, the trustee sends it to the state trea­surer’s Great Colorado Pay­back, which holds it un­til some­one — own­ers or their heirs — claims it.

But some­times there just isn’t any­one left to make the claim.

“We have one where both hus­band and wife died and there’s $44,000 in over­bid,” Spring­field said. “Their at­tor­ney said they have no rel­a­tives.”

That’s the case for Robert Gray, who lived in West­min­ster dur­ing the sum­mers and win­tered in Florida. He died in 2013, and his Colorado home was fore­closed and sold at auc­tion in Fe­bru­ary 2014, records show.

Gray, a re­tired psy­chol­o­gist from Oregon, had no known rel­a­tives. The $121,999.97 that be­longs to him will sit in the state trea­sury un­til some­one makes a valid claim.

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