Foreclosed homes flood auction

By | Wednesday, October 10, 2007

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Auctioneer Hudson & Marshall sold nearly 240 foreclosed homes in the Washington area last weekend, making a small dent in a large backlog of homes abandoned by buyers who couldn't keep up with escalating payments.

When the auction ended Sunday in a Tysons Corner hotel ballroom, the auctioneers had sold homes worth more than $46 million.

It was the biggest Washington-area auction that Hudson & Marshall has handled in its 11-year history.

More than 1,000 potential buyers or agents showed up to bid for properties at the Tysons Corner auction. Bidding on previous days in other hotels throughout the Washington area attracted hundreds of others.

More auctions are planned as local homeowners continue to get squeezed by the credit crunch.

"It indicates borrowers in the greater D.C. area may have succumbed to subprime adjustable-rate mortgages to afford pricey homes ... that would otherwise be unaffordable to them," said Dave Webb, a principal of Dallas-based Hudson & Marshall.

Monthly payments on adjustable-rate mortgages fluctuate with interest rates. Fixed-rate mortgage payments stay the same until a loan is repaid.

As interest rates have risen over the past two years, homeowners with adjustable-rate mortgages increasingly are facing foreclosure when their rates are reset.

"With the rise in foreclosed properties, more and more lenders are using auctions to move large volumes of property in a short period of time," Mr. Webb said.

Foreclosures nationwide were up 115 percent at the end of August from the year before, according to RealtyTrac, an online marketplace for foreclosed real estate.

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