Foreclosure Auctions and The Constant Start and Stop

Six Years of Stops, Starts, and Lawsuits.

Foreclosure, whether for tax delinquency or mortgage issues, is never something homeowners want to deal with. But what happens to a property after the city or a lender takes control of it? There are two types of foreclosures: Tax Delinquency and Mortgage Foreclosure. In a tax delinquency foreclosure, the Philadelphia Office of the Sheriff seizes the property and then auctions it off to individuals or businesses to recoup lost tax revenue and invest in the city. This also ensures the properties are not left abandoned and gives people the opportunity to own a home more affordably. During a mortgage foreclosure, a mortgage lender will file a grievance and once a court order gives them authorization over the property, they usually hand the deed to the Philadelphia Office of the Sheriff where the property is auctioned off as is. Both of these auctions were primarily held in person once or twice a month.

This system saw a major shift in 2020. Before the pandemic, the Sheriff’s office held in-person auctions, auctioning off nearly 4,700 deeds annually and bringing in millions of dollars for the city. During the pandemic, tax delinquent auctions were put on hold. Then a new Sheriff, Sheriff Rochelle Bilal, was elected in 2020. While auctions were temporarily paused, Sheriff Bilal implemented an online auction system, and started a small batch of test auctions in April of 2021. These auctions were halted until September of that year by a judge because it was revealed that Sheriff Bilal had awarded the 6-year contract to Bid4Assets, through a no-bid process without any approval from city contract lawyers.

This violation of the city charter led to constant revisions and lawsuits that caused all tax delinquent auctions to be in limbo until July of 2024. This delay led to over 1,000 backlogged properties, and over $170 million in back taxes owed to the city, $35 million of which should have gone to the Philadelphia school district.

While tax delinquent foreclosures were delayed, mortgage foreclosure auctions continued with their own issues. Mortgage auctions were allowed to continue on this new site, as they tended to only happen once a month and were initiated by lenders. But, buyers were warned that due to the new system being through a 3rd party, the official recording of the deed, by the Office of the Sheriff, in the buyer’s name could be delayed upwards of 90 days from the auction ending. Yet, complaints and research from the Philadelphia Inquirer found that the average wait from October 2023 – March 2024 was over 200 days. This left many Philadelphians, who were excited about owning a new home, shackled with the cost of a loan for a property that they were  unable to access. In most cases, the buyer was forced to continue paying for the property they lived in before their home purchase, while they waited for access to their new property. People hoping for a cheaper home were now stuck paying double.

Despite causing a great deal of issues for Philadelphians, these problems of deed transfer are relatively new, only the past 6 years. Prior to the online auctions, it only took a month or two for the deed to transfer, and in some cases only 20 days. But after Bilal was elected, the Sheriff department changed internal software systems, and instituted the Bid4Assets site, leading to the judicial moratorium, the backlogs began. Prior to the pandemic, the Sheriff’s office would process nearly 4,700 deeds a year, now it’s around 650. This causes less homes to reenter the market for Philadelphians, while also leaving buildings deteriorating and causing hazards to surrounding neighbors and average Philadelphians.

There has been some progress in the last two years. Tax delinquency auctions started back up in July of 2024, but the deed processing and auctions are still nowhere near pre-pandemic levels. And these auctions too have begun experiencing delays in the recording of deeds to buyers.

Over these last two years, delays have been constant, but Sheriff Bilal testified during a budget hearing this past April that her office is doing everything it can and that any delays are primarily the fault of bidders that failed to submit paperwork or payments on time. (The Inquirer contradicts these claims and argues they are getting worse)

On an optimistic side, reforms have begun to ramp up as a Common Pleas Court Judge ordered Bilal’s office to resolve these delays. If Sheriff Bilal is unable to show progress, the Court will appoint an independent “Special Master” to oversee all property auctions under the Sheriff’s office. A “Special Master” is an independent expert appointed by a judge to execute certain functions and ensure compliance with judicial review. In this case, they would effectively act as Sheriff Bilal’s boss ensuring that the Office is completing its required duties.

Since this ruling, Sheriff Bilal announced a new reorganization plan meant to modernize and streamline the Sheriff’s office, including a much asked for, public-facing deed tracker system. (Launch TBD). AHCOPA hopes that these changes will lead to a more streamlined foreclosure process where agreements can be more easily reached to help preserve homes.

Since the announcement of this restructuring there has been no further update. Yet some of the general public are skeptical that long lasting reforms will happen, and are worried given that Bid4Assets’ contract will be ending next year. Some have even gone out of their way to argue that the Sheriff’s office only executes change when a lawsuit or court order requires them too, and that these changes rarely last. 

Here at AHCOPA we are hopeful that the City will be able to provide better services and timely processes for people going through the difficult struggle of foreclosures. The constant delays have led to issues and fluctuations in the foreclosure process, leading to confusion.

But no matter the confusion, if you or a loved one is facing any form of foreclosure, please reach out to AHCOPA and check out our website for services where we will fight to help you preserve your home.