In most of the 7,400 cases we analyzed for our earlier investigation, it’s possible to determine how much a foreclosed homeowner lost because their lender used an allegedly illegal calculation method. But in more than 1,250, the math is impossible to fully unwind.
In these instances, the added amount from the lenders’ calculations was then baked into the minimum bidding prices at auction. After seeing those prices, no third-party bidder made an offer. Instead, the bank (or investors) that had held the original mortgages were able to purchase these 1,250 properties for $1,000 or less. In some instances, a third-party bidder presumably would have emerged if the minimum bidding price hadn’t contained the added interest — and former homeowners could have received cash stemming from a bid above the minimum.
The Brooklyn court system has a rule explicitly aimed at curbing the inflation of minimum bidding prices, but other counties do not, making it less clear if any price inflation could be legally problematic in those jurisdictions.
