As Philadelphia Sheriff Rochelle Bilal Shifts Office to Online Selling, City Council Doubts Deepen

After a year-long hiatus due to the pandemic, the Philadelphia Sheriff’s Office resumed sales of properties that had been foreclosed, shifting from in-person auctions conducted at a rented conference room in West Philadelphia to a online provider named Bid4Assets, based in Silver Spring, Maryland. .

Sheriff Rochelle Bilal says auctions are safe, convenient and cost effective, which will benefit sellers – homeowners who couldn’t afford their taxes or mortgages.

The city council has doubts.

Many council members fear the move may encourage land speculators from out of town to take over town properties and increase gentrification. They worry that tech geeks have an edge over Philadelphians without easy access to a computer, and wonder if the Sheriff’s Office deal puts too much of a cost on homeowners.

They asked Bilal to put the brakes on until staff members could better understand the impact online sales can have on properties and owners. The sheriff resisted.

“Despite the fact that Philadelphia is the poorest major city in America, guess what we could always brag about: that we had a high rate of ownership, especially in the black community,” said Cherelle L. Parker , chair of the Council’s Labor and Civil Service Committee, in a five-hour hearing last week on sales.

Parker is concerned that the online deal will reduce the rate of home ownership by people of color and locals.

Kate Dugan, a community legal services lawyer, was one of many who called for caution last week. She represents homeowners currently in foreclosure, many of whom have had their properties listed on Bid4Assets’ auction list.

“Help is on the way,” Dugan said, noting that Pennsylvania will receive $ 350 million under the Federal Housing Assistance Fund, which is part of the US bailout. “And it’ll cover mortgages, it can cover property taxes, it can cover utilities, so it can really save a lot of homes.”

The sheriff’s office has come under intense scrutiny in recent years as the department has been plagued by lawsuits and accusations of mismanagement of money. In addition to selling foreclosed properties, the department transports prisoners to court and provides security for the courthouse. The Committee of Seventy, a government watchdog group, called for its abolition and suggested other city offices could do their jobs better.

The longest-serving sheriff, John Green, went to jail in 2019, in part because of the sheriff’s sales. Federal prosecutors accused him of selling the office to a supporter, James R. Davis, allowing him to advertise and hold auctions, often without tendering and without written contracts. In return, Davis paid bribes and paid illegal campaign contributions. Davis received a 10-year sentence; Green’s guilty plea earned him five years in prison.

Bid4Assets, which has been around since 1999, entered the Pennsylvania market in October with a property auction contract for Montgomery County. The site has since made deals with Bucks, Berks, Monroe and Adams counties.

The company does not bill the Philadelphia Sheriff’s Office for its services, but places a buyer’s premium on all properties. The winner of a tax foreclosure would pay a premium of 10% of the property’s selling price to Bid4Assets. For mortgage foreclosures, the premium is 1.5%.

Anyone wishing to bid must also deposit $ 1,500 before the start of a tax sale and $ 10,000 before the start of a mortgage sale. These amounts are refundable if they do not win an auction that day. There is also a deposit fee of $ 35 for each deposit made. Once an auction is successful, the processing fee costs an additional $ 35.

Bilal clarified that homeowners whose homes are foreclosed do not have to pay any of the fees. By law, for tax foreclosures, any money not used to settle overdue utilities or other defaults is returned to the owner.

When asked why the office hadn’t built its own system, similar to what Allegheny County did when it went virtual last year, Bilal said it would have taken years to to accomplish because of the volume of monthly sales, which would be costly to taxpayers.

Sgt. Gina Dascola, of the Allegheny County Sheriff’s Office, said her office already has a contract with Microsoft Teams, so it doesn’t have to buy a new program. He had to buy software that allowed them to create PowerPoint presentations, and it cost them a one-time fee of $ 70.

For Montgomery County, where each property is subject to a flat rate premium of $ 1,500, the addition of Bid4Assets was a welcome change, said Oscar Gamble, a spokesperson for his sheriff. The Philadelphia contract premiums are in line with what Bid4Assets billed the other counties it works with in Pennsylvania. Sheriff’s sales to Berks, Bucks, Monroe and Adams are only for mortgage foreclosures.

“He has cast a wider net since everything is online. So we had a lot of people out of state, which we didn’t have before, ”Gamble said. The office sold four times the normal number of homes in its October sale, Sheriff Sean Kilkenny said in a November press release that noted buyers were participating from New York and California.

Bucks County Sheriff Milt Warrell said his office will be doing virtual sales all the time.

“I don’t consider this to be a pilot,” he said. “I’m looking at this because this is now how the Bucks County Sheriff’s Office works.”

If the concern is that opening sales to the quarter million registered users of Bid4Assets would lead to speculation from outsiders, it has already happened a long time ago, John said. Kromer, director of housing in Philadelphia from 1992 to 2001..

“Outside investors, including investors from other countries, are already bidding on properties for the sheriff’s sale. So not going virtual isn’t going to prevent that, ”said Kromer, a real estate consultant who ran for the sheriff in 2011 on the platform that the office should be dissolved and its functions extended to other agencies. .

An Inquirer analysis of the city’s real estate records in 2013 found that of roughly 100,000 tax-overdue properties, more than half – at least 57,500 – were owned by investors, not occupiers.

Kromer said he would prefer to see 100% of the sale of these homes go to the Philadelphia Redevelopment Authority and the Philadelphia Housing Development Corporation.

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David A. Albanese