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Will foreclosures ever go completely digital?

Why do we still do the courthouse steps? I’ve been surprised, especially with Covid, that we haven’t seen a push to make auctions happen entirely online. Seems like there’s be more global interest in properties. Is there a legal reason?

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I went to lunch with Daren Blomquist at Auction.com and was asking him if there had been any more talk on that. I think it’s something they’ve been considering for a long time. Specific kinds of auctions are handled entirely online. I’m not actually sure if there’s a legal reason they have to be on site. Maybe @Sean_OToole knows.

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Yes, legal reason. Civil code 2924g(a) states: “All sales of property under the power of sale contained in any deed of trust or mortgage shall be held in the county where the property or some part thereof is situated, and shall be made at auction, to the highest bidder, between the hours of 9 a.m. and 5 p.m. on any business day, Monday through Friday.”

Thats interesting, I assume its very easy to hold the auction in the county and online, as long as it is held in the county the legal requirement is met, I wonder why this hasnt happened yet

Perhaps - but that isn’t completely clear, one could certainly challenge whether or not a bid received from a bidder who was not in the county was actually a valid bid.

I think the other thing to keep in mind is that the fees the trustees receive to hold the sale is fixed by law. As such they are strongly disincentivized to do anything more than the law requires. While some banks opt to pay auction.com extra to put on a show in hopes of pushing bids up, in the current market even that makes little sense as the bank does not get any excess proceeds from higher bids. Unless the law is changed to require bidding to be available online I doubt we will see it. If anyone was to do it, it would likely be auction.com as they at least already have a structure in place to get paid for the extra services.

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Good discussion here. Thanks for looping me in @aaronnorris. Yes it’s really quite amazing that foreclosure auctions are done much the same way in 2020 as they were in the age where a town crier was a often-used means of communication. There has been some slow progress. Both Ohio and Florida to certain extents allow for foreclosure auctions online. At the risk of a shameless plug, Auction.com launched earlier this year a Remote Bid feature on its mobile app that allows bidders to participate in the live auction in real time from their mobile device. Needless to say that was a mammoth project and is still underway as we continue to expand the counties where that is available (see link below).

Remote Bid availability: https://www.auction.com/lp/remote-bid/

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@darenjblomquist thanks for chiming in. Has Covid moved the needle on this conversation at all? I’m thinking about technology like remote notary as an example of states making exceptions. Technology has come a long way and in some cases gives even more access. If nothing else, it would seem a hybrid model would be the future. The town crier and cashier’s check model seems so archaic.

The need and desire for social distance certainly provided us with another benefit for Remote Bid, but as far as I know we haven’t heard much on the state government front in terms of changing statutes to accommodate online sales. I think one issue now is there is not a ton of inventory being brought to auction so that may be keeping the pressure off the need to go digital. But of course we would argue now is an ideal time to prepare for the foreclosure volume when it returns to pre-pandemic (or above) levels.

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I’m already seeing the headlines of the “foreclosure wave” that data companies are using to stoke media. Disappointing because these are pre-Covid that never got the chance to emerge in spring.