Leo Nordine

Has Sold Over 5400 Properties

Why aren’t foreclosure sale regulated?

Why aren’t foreclosure sale regulated?
By Leo Nordine

In the early 1990s I tracked every foreclosure in south L.A. County, soliciting every REO listing I could get. I quickly found that some of the smaller “companies” conducting the trustee sales were crooks. Unfortunately, nothing’s changed. They’ll hold the auction for a Long Beach property in Lancaster, for instance, as far away as possible, but only after postponing the sale several times. But after the initial sale date, no one knows when the sale is scheduled because the trustee never answers the phone. The eventual buyer is always the foreclosing note holder, usually one who has bought the note at discount.

They acquire the property under market because they have no competition. Then there are the semi-legitimate trustees that at least answer the phone, but play the same game, not giving any information about their sales. These “trustees” are also active real estate investors, often silent partners of the foreclosing note holders. Also, lenders who hire honest trustees often get shortchanged. The buyers at the auctions all know each other. Instead of bidding against each other, they’ll often partner up to keep the price down. Two, three, four, even five or six partners on one property. One of them will be the official buyer, whose name shows up on the trustee’s deed, and the rest will be silent. I could give more examples, but you get the idea.
The problem is that anyone can conduct a trustee sale, with no license required, and no regulation. It’s the Wild West, and there’s a lot of cowboys. I’ve explained this to the D.R.E., the Corporations Commissioner, and the California Attorney General’s office. All were indifferent. If mortgage brokers have to have a real estate license, why not trustee sale companies? This should have been done decades ago. The D.R.E. should do this to protect the public and institutional lenders, as well as improve the reputation of the real estate industry.