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Inside foreclosure

November 13, 2009
By Deb Gau

MARSHALL - A handful of people were gathered in the lobby at the Lyon County Law Enforcement Center, waiting. There was some small talk about the weather, and prospective bidders looked through packets of information. Once a civil processes clerk and a representative of the sheriff's department appeared, things moved quickly.

It's a scenario that has happened often since the downturn in the economy as properties have been foreclosed on across the country.

In the space of a few minutes on Thursday morning, several foreclosed business properties in cities including Marshall, Ivanhoe and Tracy, with one owner listed, went to Northern Star Bank of Mankato, while other interested people left without making a bid. But that's usually how a foreclosure sale goes, said civil processes clerk Alyson Bossuyt.

"Most often, it's just the lender or an attorney there," Bossuyt said. "Sometimes if it's a residential property, a neighbor will bid, or if it's a business there's sometimes more interest."

In the case of the properties for sale on Thursday in Marshall, the sale was voluntary, Northern Star Bank president and C.E.O. Thomas Stienessen said.

Although mortgage foreclosure sales are usually held at county sheriff's offices and are open to bids from the public, it's rare for anyone but banks to purchase the properties, Bossuyt said. Vicki Oellien, the civil processes clerk for Lincoln County, said she's seen even fewer situations where members of the public bid on a foreclosed property.

"I've seen one in my 18 years," Oellien said. "I don't think they have the money to come in and bid."

Stienessen, who was present for Thursday's sale, said money can be a major obstacle for private bidders. At foreclosure sales, Stienessen said, a winning bid has to be paid in full with a certified check within an hour of the auction - and bids could be hundreds of thousands of dollars, depending on the property's mortgage and other factors.

"You don't have access to the property," Stienessen said, so it can be difficult for private bidders to assess its condition, too. And there's an additional risk in the time the owner of a foreclosed property has to redeem their debt.

"Mostly, the banks get (the property), and people just deal with the banks," he said.

The number of foreclosed properties brought to auction in the region differs from county to county. Bossuyt said Lyon County holds foreclosure sales on Tuesdays and Thursdays, and sometimes in the past year there have been as many as four sales in a day. But although Lincoln County designates Wednesday mornings for foreclosures, Oellien said there are many weeks when there are no sales to hold.

"I don't think we have anywhere near as many as big cities do," Oellien said. "And a lot of them get canceled, or the owners work something out with the bank."

The housing crisis and poor economy don't seem to have had much of an effect on the number of foreclosure sales held in Lyon County, Bossuyt said. Within the year that she's been serving as civil processes clerk for Lyon County, she said the number of residential foreclosure sales has started to drop.

"It's really leveled off this year, because of the help that's been offered from the government," she said. A Minnesota law that went into effect this summer also gives property owners the ability to postpone foreclosure for five months.

Oellien said she doubted the new law would lead many people to postpone foreclosure.

"It costs money, and if you're already behind on payments," she said, it might not be an option.



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