A four-day foreclosure auction that begins today will include more than 300 Atlanta-area dwellings.

Lenders struck out trying to sell the properties the conventional way, so now they're looking to bottom-feeding investors and bargain-hunting families to make their problems go away.

No ZIP code is better represented at the auction than 30310 in southwest Atlanta, an area hard hit by mortgage fraud. Initially, 44 homes there were to be auctioned, but by Tuesday that number was down to 26 after pre-sales and withdrawals.

Located between I-20 to the north and Ga. 166, the 30310 neighborhood is home to the Hammonds House Museum and a lot of vacant, neglected homes that were flipped during the days of easy credit. One-quarter of the residents live below the poverty level, market research firm Claritas says.

Nia Knowles, a Realtor and community activist in 30310, said eight of the 11 homes on her block are empty.

"We were just left out on our own," the Brooklyn native said. "There was nobody watching us or defending us."

A gentrifying low-income area is particularly vulnerable to mortgage fraud because "there are such a wide range of values," said Jude Rasmus, vice president of Rasmus Real Estate Group, a Marietta company that specializes in selling bank-owned properties.

During the housing boom, inflated appraisals boosted the values of even the humblest of homes, she said. Banks made loans based on those appraisals —- some of which were fraudulent —- even though borrowers often had no intention of moving in; they bought the houses to sell for a quick profit.

When the housing market crashed, lenders saw their collateral plunge in value, and many were unwilling to accept that the house with a $100,000 loan was worth $50,000 or less.

"They didn't adjust with the market properly," Rasmus said.

After failing to sell the properties through agents, the lenders resort to auctions to cut their losses.

"The write-offs on the properties are huge. The lenders are getting beat up unbelievably," Rasmus said. Some properties, she predicted, will sell for less than $10,000.

And some will not sell. The property owners, all national lenders and big asset-management companies holding mortgages, have put undisclosed reserves on the lots, said Dave Webb, co-owner of Texas-based Hudson & Marshall, the auction company. If the reserve is not met, there is no sale.

Agents who have been trying to move the properties, such as Rasmus, will get commissions in the range of 2 percent if their listings sell at auction.

Auctioning hundreds of homes at one time is not new in Atlanta. A similar event was held last month at the Georgia World Congress Center.

Knowles said she is ambivalent about homes in her neighborhood going to auction. If they are occupied by new owners, great, she said. But if investors buy them simply to hold or rent with little concern about their upkeep, then 30310 is no better off, she said.

"My fear is we're going to have the same issue we had before," Knowles said. "I don't want to be stuck with houses that aren't properly managed by some investor who just flew in."

The Hudson & Marshall auctions will take place at 7 p.m. today and Thursday at the Atlanta Marriott Northwest hotel, and Saturday and Sunday at 1 p.m. at the InterContinental Buckhead hotel.

Webb said the housing tailspin may be slowing. Freddie Mac, the quasi-governmental mortgage buyer, canceled plans to put more than 30 homes in an auction when it was able to sell them, he said. And this week's Hudson & Marshall auction is smaller than the one it held in January in Atlanta.

"The market's picking up a little bit," Webb said.

 ELIZABETH LANDT / Staff
Map shows shaded area of 30310 ZIP code. Inset map shows area of detail.