Thomas Breen photos
Exchange St. resident Jackson, with court-appointed attorney Troiano: $298,000 "a little steep" for foreclosed house.
The country’s largest bank boxed out a group of potential local buyers at a Fair Haven foreclosure auction by submitting the only bid — at a price $18,000 above appraisal — for a boarded-up, squatter-occupied three-family house on Exchange Street.
That one-bid auction took place at noon on Saturday at the corner of Exchange and Lloyd Streets.
As thick white snowflakes blanketed the intersection, five potential buyers — including two from that very same section of Exchange Street — put on their winter coats and braved the cold to talk with court-appointed attorney Nicholas Troiano about the rundown vinyl-sided house up for sale.
302 Exchange St.
In the 15 minutes preceding the noon sale-time, Troiano greeted each potentially interested buyer with what proved to be unwelcome news.
“The opening bid is $298,000,” Troiano said.
That is, JP Morgan Chase, the bank that initiated the foreclosure lawsuit against the property’s now-former owner back in January 2020, had already committed to paying at least $298,000 to buy the house. The state court, meanwhile, recently found that the fair market value of the Exchange Street property was only $280,000, and that the property carried with it over $258,000 in debt. (For tax purposes, the city’s assessor most recently appraised the property as worth $311,800.)
“I don’t think anyone will buy it,” said one no-longer-interested potential bidder named Davon. The resale price for this property is probably only around $300,000, he estimated. Given how much money and work it would require to fix up, the profit possibilities looked slim.
A fellow Exchange Street resident named Jackson agreed. “It’s a little steep,” he said upon hearing the $298,000 opening price. Jackson (who asked to be identified only by his last name) already owns two houses on the block, closer to James Street.
“It’s not bad,” he said about the area — and about the house up for sale. “It’s just,” he continued, the house isn’t a good deal at that price.
Jackson, a Bronx native who has lived in Fair Haven for 20 years, said he works full-time as a porter maintaining a 200-unit apartment building on 14th Street in Manhattan. He said he doesn’t feel strongly about whether an out-of-town or local buyer winds up taking ownership of 302 Exchange, as long as whoever the new owner is fixes it up and makes it livable again.
Exchange neighbor Julio Pena: "It's a gut job."
Another Exchange Street neighbor and potentially interested bidder, Julio Pena, was disapponted at the prospect of yet-another out-of-state investor scooping up another house on the block.
“We the people that live here, we don’t have a chance to buy houses like this,” he said. “It’s the people from out of state with the money, they take everything from us.”
Pena said he’s lived in Fair Haven since 1968. He owns his house nearby on Exchange Street. He said he built a nearby house for his daughter, who runs a daycare center out of it.
The view inside...
Appraising the house’s rundown facade and the near certainty that people are squatting inside, Pena said he’d pay no more than $100,000 to buy the property — since he thinks it would cost around $150,000 to fix up.
“It’s a gut job,” he said.
Pena said he’s been in the house before — many times, in fact, as the property manager hired by the former owner, who lives in New York, used to call him in to make repairs. “I did all the work in the house. I fixed everything: plumbing, electrical,” Pena said about 302 Exchange. But still, as he resigned himself to the fact that he wouldn’t be putting in a bid on Saturday, $298,000 is way too high. Because “it’s a gut job,” he repeated.
Troiano: 18 or 19 calls of interest. Until he told prospective buyers the opening price.
Troiano said that, in the run-up to Saturday’s auction, he received 18 or 19 different calls from mostly in-state investors interested in the property.
“That’s a lot” of calls based on his experience overseeing foreclosure auctions, he said.
Why so much interest?
“Because it’s a multi-family” property, Troiano surmised. “People look at it as an investment property.”
Troiano then recounted for Pena and a real-estate-agent friend who had come with Pena to the auction: “When I told everybody what the opening bid was, I asked, ‘Are you still interested in coming?’ They said, ‘No.’ ”
The court-appointed attorney added that he had heard from one of the neighbors “that there are people squatting in here.”
“I know these guys,” Pena said about the people likely living inside. “They don’t harm anything. Summertime, they always hanging out here.”
At around 15 minutes past noon, and with only the bank’s $298,000 offer on the books, Troiano closed the auction.
“Gentlemen, thanks for coming,” he said to Jackson and Pena. “You made it interesting.”
Looking west on Exchange Street.
Before heading back through the snow to his own Exchange Street house, Jackson explained to this reporter why he first moved from the Bronx to New Haven more than two decades ago — even though his job required him to commute to downtown Manhattan every workday.
“I figured I had to buy my own place, and the only place I could afford was up here,” he said about New Haven. “I just decided to check where I could get decent housing that I could own at a decent price.”
He bought his nearby single-family house for $62,000 back in 1999. “With the bank loan and everything, it ended up being $150,000.” He said he was then able to buy the house next door directly from his neighbor. “I had to gut it, fix the roof, fixed all the windows.”
How has Fair Haven changed during his time here?
“When I bought my house, it was the perfect market,” he said. These years later, he still enjoys living where he does. “The neighborhood is not that bad. You do have some elements in the summertime. That’s like any neighborhood. I’m coming from the Bronx, I’m used to that.”
What’s one thing he would change about the block if he could to make Exchange Street a bit better of a place to live?
Jackson paused, reaching for something that could be better, before finding a response: “There’s not enough parking.”
To be sure, the bank did not actually come up with $298,000 as a bid. The bank has the privilege of bidding its debt. No new money, changes hands, the bank is able to bid the amount if it’s debt as if it were paying cash. To say that that is necessarily a bad deal for the bank, doesn’t take into account, incentives afforded to these banks, interest in taking losses for tax purposes, and many other business decisions. Finally, and paradoxically so, the bank or its related entities are generally well capitalized. That way they have the resources to put this house back on the market at some point in the future. Finally, if the bank did not bid its debt, the sale might have gone through for 100,000 or 125,000 as suggested in the story. If that happened on a regular basis, it would eventually push property values down. The banks don’t want property values to go down because that would impair their existing collateral.