Foreclosure auction ads are deceptive, suit alleges
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
A lawsuit to watch, from Inman News: ‘A lawsuit filed in California Superior Court challenges real estate auction practices, charging that some auction companies engage in deceptive advertising and violate provisions of federal law related to real estate closing services.’
More: ‘’Many modern real estate auctions are nothing more than a bait-and-switch scheme to lure hopeful buyers to submit offers that can later be accepted or rejected by the lenders/sellers, despite the general public’s perception that once the auctioneer declares, ‘Sold,’ the property is in fact sold,’ the lawsuit charges. ... Filed June 12 on behalf of three individuals who attended a real estate auction event in Southern California -- including one individual who is a RE/MAX real estate broker -- the lawsuit also charges that auction companies ‘direct and require the use of their settlement service providers and shift the cost of sales, including commissions, from the lenders/sellers to the consumers’ in auction event signing rooms.’
The lawyer who filed the suit, Shawn M. Olson of Spainhour Law Group, told L.A. Land that one of the plaintiffs, Laura Torres, was the winning bidder on a Corona house, bidding $153,000 for a home listed with a minimum bid of $95,000. ‘So she signs all the contracts, opens escrow, gets an appraisal, gets inspections, and 29 days later, when she thinks escrow is going to close the following day, on the 30th day, Countrywide calls and says they need $50,000 more -- on a $153,000 home,’ Olson said.
The lawsuit names as defendants Countrywide Home Loans Inc., GMAC Mortgage LLC, Real Estate Disposition Corp. and DoveBid Inc., which partners with the brokerage company CataList Homes. Inman quotes CataList president Michael Davin saying, ‘I can’t comment specifically on the case as I haven’t read the documents. However, we will stand firm and defend our auction practices as the reserve auction method is an effective and fully legal sales process utilized for hundreds of years in the sale of many types of assets.’
Inman further reports that GMAC had no immediate comment and that representatives for REDC and Countrywide could not immediately be reached for comment.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.