Foreclosure: an auction adventure

Karen Krynen sees opportunity.

So after dropping her two children off at preschool one day last month, Krynen headed for Los Angeles County Superior Court in Norwalk, where foreclosed houses were being auctioned on the steps outside.

The ponytailed Krynen spotted a small crowd gathered against the building's towering, black-marble portico. The two dozen or so bidders, mostly men, whispered into cellphones, tapped into databases from their laptops and juggled clipboards loaded with documents and printouts.

No one seemed particularly friendly.

"I walked up and thought, 'Oh no, this is what they do for a living,' " said Krynen, 42, clad in khaki capri pants and a jean jacket. "They had their Bluetooths, their computers

"I kind of hoped that nobody else would be around."

Still, it didn't come as a complete surprise. Krynen had read the headlines: More and more homeowners are going into default as mortgages with low introductory "teaser" rates adjust to higher payments. There were 5,977 foreclosed homes on the auction block in Southern California in the first three months of the year, up from 711 in the same period last year, according to research firm DataQuick Information Systems.

Homes typically enter foreclosure when borrowers can no longer make their payments and can't sell their homes for amounts that would pay off their loans.

State law requires these properties to be sold at public auction, which in theory puts everyone on an equal footing. Amateurs such as Krynen, however, face competition from professional real estate investors as well as the lenders themselves, who come to the auctions ready to bid for homes they issued loans for if it appears that the properties can be resold at higher prices.

For years, Krynen had seen the ads and come-ons promising to reveal the "secrets" of buying foreclosed property. But the notion of buying a home this way didn't take shape until a few weeks ago, when she came across a website for Irvine-based RealtyTrac Inc.

The site offered a trial subscription to troves of foreclosure data, which are public but not very accessible. Krynen was intrigued. A few mouse clicks later, she found a house about five miles from hers in Whittier. The owners had defaulted on the mortgage and were facing an auction in two weeks. Opening bid: $100,000.