Will Online Foreclosure Auction Prevent Intimidation, Collusion?

Houses on the 2900 block of S. 11th St. Photo by Jeramey Jannene.

Milwaukee County is looking to move its sales of foreclosed properties online in order to thwart the intimidation and collusion by problem landlords that have marked the proceedings in the past.

The county board is considering a request by the Milwaukee County Sheriff‘s Office (MCSO) and the county’s IT division to create an online clearinghouse for the foreclosure sale process that would handle all the payments and bidding — allowing participants to engage in the process entirely virtually.

The proposal would use $277,980 from a $7 million pool of money for “digital transformation” that was created with the county’s allocation of American Rescue Plan Act funds, to build out the new online foreclosure sale system. The board’s Finance Committee has already recommended the project for approval, and the Judiciary, Law Enforcement and General Services Committee offered its support Monday.

Milwaukee County Corporation Counsel Margaret Daun told supervisors that during both her time in the City Attorney’s office and with the county there have been “extensive problems with both intimidation, collusion and other, what I would call negative behaviors, related to foreclosure sales.” She added, “It is generally considered when you look at foreclosure sales, that moving them online does increase the fairness of the process and reduces the ability for effectively — and I’m going to be pretty blunt here, use some layperson language — bad actor landlords to overwhelm the process and dominate it.”

State law puts the MCSO in charge of selling foreclosed properties in Milwaukee County. Money from any sales is passed back to the courts and any profits are passed along to the previous owner of the property, said Pat Carravetta, MCSO fiscal administrator.

Every Monday, in a room in the basement of the Milwaukee County Safety Building, 821 W. State St., a foreclosed real estate auction is held. As Cary Spivak and Kevin Crowe reported in 2018, some of the city’s most notorious problem landlords are regular fixtures at these auctions. These are landlords with histories of tax delinquency, chronic evictions and code violations.

“In-person auctioning: there’s no question that there is a need to move away from that,” Daun said. “If you haven’t observed one of these auctions, and seeing sort of what goes on, it is revelatory, to say the least.”

One person who has observed these auctions is former supervisor Eddie Cullen, now the Communication Manager in the Office of the County Clerk. Cullen authored a resolution in 2018 that supported the creation of an online system after his experience with the current foreclosure auction process. “It can be scary,” he said.

“So you’ve heard from a number of people who talked about intimidation and collusion,” Cullen said. “It very much is an insider’s club of landlords who say, ‘Yeah, don’t bid on this one. I’ve got this one. We’ll let you get the next one.'”

Cullen said the online system wouldn’t eliminate the possibility of intimidation or collusion, but it would certainly make it more difficult. It could have another benefit.”People are a little bit more brave over computer screens than they are sometimes in person. So allowing people to make those purchases over their computers, and have access to the group of properties just makes sense.”

Cullen said he sought to move the county toward an online auction to “protect the average citizen who was trying to bid on a house.” He added that an online auction would likely be more equitable, because, “all you need in this new system would just be local library internet access.”

Matt Johnson, a county IT director, said they would look into public kiosks for citizens to access the online auction as part of the project.

The project will go before the full board for final approval in February.