Get Your RedHot Foreclosures Here

Riverside, Calif.

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Foreclosure Frenzy About 1,200 people attended an auction of foreclosed homes at the convention center in Riverside, Calif.

ON a foggy Sunday morning last month, the parking lots around the convention center here were filling fast.

The volume of the traffic downtown was not unusual. What was unusual was that the men directing the traffic were in tuxedos.

The crowd - about 1,200 people looking for real estate bargains - was decidedly less formal, in jeans and Dockers, shorts and sandals. The casual dress code concealed the fact that many were serious buyers, collectively carrying millions of dollars into the hall in cash and cashier's checks.

Some were investors, like Dendy and Rita Villegas of San Diego, who were looking to pick up an inexpensive house to rent out. Some were first-time buyers, like Rodolfo and Veronica Gonzalez of Fontana, who were hoping to save 0,000 or so off the asking price of a family home.

They converged on an event the likes of which Californians have not seen in a decade: a large-scale auction of foreclosed homes.

On this occasion in Riverside, two lenders put 100 properties on the block. By the end of the day, 93 had sold. Most of the properties were in fast-growing exurban and desert communities in Riverside and San Bernardino Counties east of Los Angeles.

The company that held the auction had been dormant for a decade. But in recent months, when mortgages started going bad and foreclosures multiplied, several lenders contacted the company's officers and asked if they could get back into the business of auctioning properties. "We went into hibernation, and we're back!" said Robert Friedman, the chairman of the Real Estate Disposition Corporation in Irvine.

The company sold more than 265 properties in San Diego, Los Angeles and Riverside during two weekends in May, and it is planning to hold auctions in Sacramento, Modesto, the Bay Area and Atlanta this summer.

Mr. Friedman described his trade as a "countercyclical business," and he said that the banks unloading the properties preferred not to be identified.

In some cases, he said, the institutions sold the properties for less money than they were owed. "It's not a happy occasion," he said. "They'd rather take a little loss quickly, rather than waiting and seeing."

However unhappy the occasion may have been for lenders, the auction company put on a high-spirited event. All that was missing was the preacher and the tent.

The men in tuxedos were not confined to the parking lots. They were also inside the convention center, answering questions and showing the way to the auction hall. Opposite the hall, a ballroom held 41 loan officers and 25 escrow officers. Before the bidding started, a jubilant soundtrack poured from the speakers.

During a brief seminar before the auction, Mr. Friedman gave the theme of the day. "Today's the day," he told the crowd, as staff members wheeled in extra chairs for hundreds of people standing in the back.

"The time to buy real estate is when the market is soft," he said. "Today's the day. Don't regret not buying at this auction."

Foreclosures have surged in Southern California in the last year, particularly in outlying areas. In seven counties, lending institutions foreclosed on 6,007 properties in the first quarter of 2007, up from 721 properties in the first quarter of 2006, according to DataQuick Information Systems, a research company based in San Diego.

In Riverside and San Bernardino Counties, lenders foreclosed on 255 homes in the first quarter of 2006. That number grew to 2,369 in the first quarter of 2007, according to DataQuick.

John Karevoll, an analyst at DataQuick, said the data show "pockets of distress" in outlying areas that experienced a lot of new building.

"The foreclosure numbers are a function of how many loans are made," Mr. Karevoll said. "If you go to a new area, you have a higher percentage of people who bought in the last five years. You just have a higher percentage of people who get in trouble."

The normal process for the auction of foreclosures in California can be complicated, and it tends to be a game played by professional investors. After completing legal default proceedings, banks typically auction properties on the steps of county courthouses. Buyers have no opportunity to inspect the properties and must pay in full, in cash. And the sellers do not have to guarantee that the title is clear of liens and mortgages.

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