At the weekly foreclosure auctions in Brooklyn, decades are undone in the space of a few minutes. There’s a house in Crown Heights, a Dutch Renaissance revival built in 1889 and owned by the same family for more than half a century. In 1969, the former landlord deeded it over for $10 and “other valuable consideration,” the paperwork stipulating that the house would belong to the couple’s heirs forever. Over the years, the family would take out small loans against the property and pay them back. But something changed around 2007, once the housing market had started to unravel. The bank lent $225,745. The family couldn’t pay. Maybe they lost their jobs or had a death in the family. Maybe the loan was simply too big. It happens all the time.
The bank put a lien on the house, and a district court dismissed a challenge from the homeowners alleging the bank engaged in “predatory lending practices,” allowing the foreclosure to proceed. Then the house sat in limbo for years, until a windy day this June when a jowly personal-injury attorney moonlighting as an auction referee stood outside a Brooklyn courthouse and said, “All right, it’s showtime!” About 20 people, most of them men and many of them weekly attendees, crowded around. The referee had a clear appreciation for the drama of the moment: “Hold on a goddamn minute,” he yelled into a flurry of bids. “I don’t get paid enough to do this — go slow.” In the space of two minutes, the house went to a short man with a beard who ran in at the absolute last minute, for $1.9 million. A few people groaned. “That’s my friend,” Drew, a Jamaican immigrant who has been flipping houses since 2013, told me through a grin.
Drew has a lot of friends; the auctions can feel as much like a social club for self-identified entrepreneurs as a staging ground for what might be the worst event of a person’s life. I asked him what brings people to the courthouse, week after week. “People come here for opportunity,” he said. “Or out of desperation,” countered Drew, another regular who arrived in New York from Trinidad as a teen and says he flipped his first house in less than 60 days after getting into the game. (An “older guy,” a veteran of the market, helped him drum up the initial cash, he said.) Drew didn’t have much sympathy for people on the losing end of the transaction. “How do people lose houses in this market? Does that make sense to you?” But Jonathan, glancing at my notebook, was more contrite: “People have financial troubles,” he said, “or the matriarch dies. I buy houses from people like that.”
According to a recent report, one in ten homes sold in the United States in the first quarter of 2022 had been successfully flipped, but a windfall can be hard to come by these days: Everything’s more expensive, profits are down. As one attendee told me, he’s been having a terrible time during the pandemic — there just aren’t as many high-quality homes on the chopping block. But the foreclosure moratorium is long over, mortgage delinquencies are on a tentative rise, and some economists are predicting a recession. So people keep showing up. Hope springs eternal for the small-time hustler.
Every borough hosts a weekly auction. In Brooklyn, since the beginning of the pandemic, they happen Thursdays on the steps of the Supreme Court building, a dirty set of stairs shaded by scaffolding in downtown Brooklyn. A couple dozen people are present to see what’s on offer that morning; no one wants to say their name. Two women preferred to go by the LLCs they’d recently incorporated for what they hoped would become lucrative real-estate businesses: Creative Visions and Sparks of Shine, respectively. “Damn, that was quick,” the proprietor of Creative Visions said under her breath when a brick duplex on a residential street in Canarsie sold back to Fannie Mae for the minimum bid of $500,000. No one wanted to, or could, bid higher.
The crowd was mixed, a collection of more traditional suits alongside strivers and lateral predators trying to make some quick cash or get a new side hustle off the ground. There’s a dearth of definitive data about house flippers themselves, but average profits on a “typical flip” run around $67,000 nationwide — the kind of money that might be a drop in the bucket for a large firm or a person with generational wealth, but a nice take-home for the more modestly rich and people hoping to get there.
There were, of course, bored men in loafers and windbreakers looking to expand their Connecticut portfolios to Brooklyn, but this is also an enterprise attractive to people who’ve watched a lot of house-flipping reality TV. A 52-year-old school nurse who owned her own home in the Bronx said she’d been there every week since the winter, hoping for a property under $200,000 she could fix up and sell. She’d heard about the auctions from a friend and stood out next to the rowdy knots of bidders, leaning against the scaffolding and quietly taking notes.
After a mixed-use building managed by a trio of LLCs, including one called CHILLAX MGMT, went for $535,000, a two-story brick building in East New York with a bright-red door and a crumbling stoop came up. The home had been purchased in 2006 for $506,500 by an elderly veteran named Victor.
A few years after the first foreclosure notice, he had attempted to represent himself against a firm the bank hired, a New York operation with three offices across the state — all specializing in the prompt recovery of funds large businesses are owed. Court records showed he had filed a series of typed pages describing himself as a “victim of Predator lending,” and attached a photocopy of a short New York Daily News item in which the city’s then–Attorney General Eric Schneiderman threatened to sue Wells Fargo for failing to comply with a previous settlement agreement. Victor also included what appears to be a form letter from Barack Obama, who encouraged him to “speak with a housing specialist at 1-888-995-HOPE.”
“While this court recognizes the defendant is unrepresented and may be unfamiliar with civil practice and procedures,” the judge replied, “such unfamiliarity likewise cannot constitute a reasonable excuse.” At the auction, an investor group that had purchased his bad debt paid $900,000 for his home, the latest instance of development groups and anonymous LLCs increasingly targeting family homes in East New York.
People without legal representation going through financial hardship have no chance against the armies of attorneys retained by a bank. Like Victor, the owner of the Dutch Renaissance revival in Crown Heights filed a dispute alleging unfair trade practices and predatory loans; the case was thrown out when she took too long to file the necessary paperwork. It’s a maze that’s easy to get lost in.
For people losing their homes, the foreclosure process can stretch on for years. For the representatives of major financial institutions and the petty operators at the auctions, though, it’s those final seconds that matter. In the end, Victor’s home boomeranged back to the bank in less than a minute, as did six other properties I saw auctioned off over the course of two weeks. The self-made real-estate investors of Brooklyn only saw their dreams realized every once in a while, and then the private lenders who hung around the auctions swooped in with business cards offering them loans for renovations they might not be able to afford. The nurse from the Bronx expected to come back every week until she found something she could handle. Someday, she hoped, she’d find an opportunity where money could be made. Drew said he’d made a $550,000 profit on one of his houses; Jonathan, something closer to $300,000. But for everyone — the foreclosed homeowners and the enterprising investors and the bidders — it seemed awfully hard, in any scenario, to beat the bank.