Julius Davee had hit hard times.
A workplace injury cost Davee much of his left arm above the elbow. With his disability, he couldn't do his job as a diesel mechanic. He began struggling to make the mortgage payments on his three-bedroom, 1969 Milwaukie home near Johnson Creek.
In 2016, his home went into foreclosure. It was scheduled to be sold at a sheriff's auction.
Then Sean Robbins entered Davee's life.
Robbins, 36, is the king of Portland-area foreclosures. He runs Vantage Homes, a California-based company that has bought and sold hundreds of Oregon homes since the last housing market crash.
After Davee went into foreclosure, a Vantage employee called him with a proposition: Robbins' company would pay him up to $2,500 to sign a few papers before the sheriff's auction.
What Robbins wanted: something called "redemption rights."
Davee, 76, says he'd never heard of redemption rights. And he had no idea those rights, granted by Oregon law, allowed him to "redeem" or repurchase his home within 180 days after it was sold in a foreclosure auction—by paying whatever price the house sold for at auction, plus interest.
Given that Davee couldn't even afford his mortgage payments, there was no chance of that happening.
Vantage Homes offered him $300 for his redemption rights—and another $2,200 if Vantage bought the house at auction.
Davee signed the deal on July 1, 2016. Eleven months later, a Robbins-controlled company did buy Davee's house at auction, paying $183,200.
But rather than Vantage Homes, the buyer was another company Robbins controls, called Sean John LLC.
So one of Robbins' companies got Davee's house—but Davee never got the additional $2,200.
"I haven't gotten a dime of it," Davee says. "From what I can find out, the guy [Robbins] put it in another company's name. He's a shady dealer."
By buying Davee's redemption rights for just $300, Robbins controlled a home worth at least 600 times that amount for nearly a year, discouraging anybody else from buying it.
As for Davee, he became the victim of a practice virtually unknown outside a tight circle of real estate investors. It's entirely legal and essential for controlling the supply of foreclosed homes, which has dwindled as the real estate market has soared.
Foreclosure auctions have lately been the largest source of single-family homes in Portland's red-hot housing market—and in some years, they outnumber the construction of new homes.
What's never been reported, however, is the murky trade in redemption rights, a market that has exploded even as the number of foreclosures has declined. For Robbins and other flippers, redemption rights are the means of controlling a precious commodity. Recent transactions in Multnomah County have ranged from as much as $20,000 to as little as $200, with the latter figure much more common.
Critics say the market for redemption rights almost never results in the intended outcome—allowing foreclosed homeowners one last chance to reclaim their properties.
Instead, they call it a legal oddity that benefits scavengers—and nobody else.
WW spent weeks examining stacks of property records and talking to people on all sides of redemption rights in the Portland area. We found a market rife with manipulation, sketchy practices and unwanted surprises.
"There's no social utility to the trade in redemption rights," says Ian Shearer, a Portland consumer lawyer. "There's such an imbalance in knowledge between the buyer and seller. It's like going to a garage sale and buying a Monet for a dollar. Is the person who buys it a criminal or a genius? I guess it depends on how you look at it."
It's hard to tune into reality television or AM radio without encountering the profit potential of flipping houses.
At the civil process office, Portlanders can do three things: obtain concealed handgun licenses, register as sex offenders, or buy cheap homes. It's where banks auction foreclosed properties.
Regular citizens don't have much of a chance there. On a recent rainy Tuesday, Sarah Danya sat scribbling notes at a Formica-topped table under flickering fluorescent lights as a dozen potential flippers congregated.
In a room of burly men in Carhartts, weathered sports fleeces and paint-spattered clothing, the wiry Danya stood out in her bike polo T-shirt and knee socks that read "Fuck Nazis."
Danya, 28, is a health care worker who wanted to learn about foreclosures. She grew up in Los Angeles, in a home her parents bought at auction. She hoped to follow in their footsteps.
Danya and others were there for the auction of a foreclosed home in North Portland. The bidding started at $209,000 and proceeded first in $100, then $1,000 increments to $258,000. Two of the bidders, obvious pros, communicated on phones to money men elsewhere.
"It definitely favors the people who do it all the time," Danya says.
When the winner, Hector Hassen, stepped to the auctioneer's lectern with a cashier's check for the full amount, one of the losing bidders issued an ominous warning: "We own the rights to that house," he told Hassen, meaning his company had bought the redemption rights earlier and could take the house away from Hassen any time in the next 180 days.
The booming trade in redemption rights infuriates experienced foreclosure buyers like Hassen.
A fastidious semi-retired gas station owner, Hassen, 69, has bought "a few" foreclosures over the years. He says he refuses on principle to buy rights, even if that means waiting six months to begin renovations—to see if speculators will decide the house is valuable enough to exercise their redemption rights.
Hassen says flippers have made redemption rights a business, often acquiring them for a few hundred dollars then trying to get foreclosure buyers like him to pay 10 times that amount—or more.
"The redemption rights law is supposed to benefit the homeowner who's losing his house," Hassen told WW. "I don't know of one case of where the owners came and got their house back."
As the housing market stayed strong, more flippers entered the trade for redemption rights, expanding the market from a few transactions in 2013 to hundreds in Multnomah County alone last year.
Everybody agrees that Sean Robbins is the biggest player.
And he's not shy. "Vantage is known for paying top dollar to homeowners who are in a position to sell their redemption rights," his company's website says.
A baby-faced UCLA grad who lives in Northeast Portland with his aging puggle, Turkey Boy, Robbins does not look the part of a property magnate.
Real estate has been good to him—he owns a $2.2 million duplex on the water in Newport Beach, Calif.—but he spends most of his time in Oregon overseeing his burgeoning empire.
Robbins declined WW's requests for an on-the-record interview and did not respond to written questions. He did describe his business in a November 2017 email to a critic, who shared the email with WW.
In the email, Robbins says the market for redemption rights provides an indisputable benefit. "The sale of redemption rights gives homeowners who otherwise want to walk away from their homes a chance to get some money out of an already terrible situation," he writes in the email.
Robbins also says he's bringing efficiency to a slow-moving, archaic market that badly needs it.
He says his activities clean up blighted neighborhoods and support public services: He's paid $1 million over the past five years in delinquent Portland city liens and pays $1 million a year in property taxes to various jurisdictions.
"Our company prides itself on integrity, hard work and bettering the community," Robbins writes in the email.
Not everybody thinks so.
Bill Linn got a painful introduction to Robbins.
A youthful photography aficionado, Linn, 51, built a public relations career defending the makers of violent video games, including Grand Theft Auto. A couple of years ago, he sold his business and a 33-acre gentleman's farm near Eugene and moved to Portland. He and his wife, Tammy, 52, don't think of themselves as flippers, but they enjoy fixing up houses.
They decided to buy their first foreclosure.
Last November, they found their target: a home just off the Mollala River in the Clackamas County hamlet of Shady Dell.
The Linns bought the property at a sheriff's auction for $185,000. "We thought, 'Hey, we just got a hell of a deal,'" Linn recalls.
The Linns drove to Shady Dell to see their prize.
"Some transients had been squatting there, but we immediately fell in love with it," Linn says. They drove to nearby Mollala for a lunch of enchiladas and chile rellenos, and picked up face masks and hammers at Ace Hardware.
"I could tell there was mold," Linn says. "I wanted to crack the walls and check out how bad it was."
But when they got back from lunch, there was a man changing the locks on the doors.
"I said, 'What're you doing?'" Linn recalls. "He said, 'I'm changing the locks because we own the house.' I said, 'No you don't, we bought it at auction today.'"
The man explained that Vantage Homes owned the redemption rights—which meant Robbins' company could grab Linn's home at any time in the next 180 days.
"We went back to town and Googled 'redemption rights,'" Linn says. "There was never any disclosure at auction, and there was nothing recorded under the name of the man who'd owned the house that said he'd sold the rights."
Linn got Robbins' number from the man and placed a call.
"He said, 'The rights cost me $500,'" Linn recalls. "'If you give me $5,000 [for those rights], you can start work tomorrow.'" Otherwise, Linn would have to wait 180 days because Robbins could exercise his redemption rights during that time and keep the value of any improvements Linn made.
"I thought he was blowing smoke out of his butt," says Tammy Linn, "but we did some more Googling and said, 'Holy cow, this is a real thing.'"
The Linns decided to tarp the roof of their new house and wait.
"May 15 is the date we can start work," Linn says. "It's kind of a pain in the ass. I wouldn't mind if it was the original owner holding us up, but this is a rip-off."
In a November email, after much back and forth, Robbins lowered the price for which he was willing to sell Linn the redemption rights to $500. No sale.
Bill Linn experienced one aspect of the redemptions trade—a flipper looking for a quick payday from whoever bought the house at auction. There are others.
Sometimes, the holders of redemption rights wait in the weeds and pounce to redeem a house months after it's sold at auction.
That happened to Brenda Reilly, who says she's been flipping houses in the Portland area since the mid-1990s.
On Feb. 21, 2017, records show, Reilly's company, Care Property LLC, bought a house at a Multnomah County sheriff's auction for $133,000.
Robbins' company, Vantage, owned the rights to the house—and had done so for four months—but did not record the purchase of the rights until the day of the auction.
Then, nothing happened. Reilly wouldn't start fixing the house up because Robbins' company owned the redemption rights. Finally, records show, 171 days after the auction, Robbins' company exercised those rights, taking the house away from Care. (Had Reilly invested, say, $25,000 in remodeling the house, Robbins could have bought the house for the auction price and paid nothing for the improvements Reilly had made.) Flippers would generally prefer not to exercise redemption rights because doing so restores any pre-existing liens, such as property taxes or second mortgages, that otherwise get wiped out in a foreclosure auction.
Other times, redemption rights get flipped from buyer to buyer, like rare baseball cards.
The profits just from buying and selling rights can be remarkable. Records show, for instance, that Vantage Homes bought the redemption rights to a Lake Oswego condo in June 2016.
The owner, Mathilde Danzinger, had paid $207,400 for the condo in 2006. Now, it was headed to a foreclosure auction.
Vantage paid Danzinger $200 for her redemption rights, with the promise of $1,800 more if Vantage bought the condo at auction.
But just seven days after recording the purchase of Danzinger's redemption rights, records show, Vantage sold those rights to another company for $10,000—a 50-fold return on Vantage's investment.
That flipper profited as well, buying Danzinger's condo at auction for $151,000 in September 2017 and selling it for $235,000 just four months later.
Critics say the evolution of the market for redemption rights virtually never results in the intended outcome—allowing foreclosed homeowners to reclaim their properties.
"I've never seen it happen," says Care's Reilly.
Redemption rights are unregulated. Gene Bentley, director of the Oregon Real Estate Agency, which licenses real estate professionals, says his staff has not received much communication about them.
But the agency did receive a March 11 complaint that shows how far flippers will go as foreclosures dry up and competition increases.
A Southeast Portland man named James Giese, 36, died unexpectedly in December 2016, leaving no will.
His 10-year-old daughter inherited Giese's Woodstock home. But the girl could not make mortgage payments, and there was no equity in the home, so her grandmother, who was executor of the estate, told the bank the girl would surrender the house.
Flippers rushed to buy the redemption rights, which belonged to the 10-year-old.
The girl's step-grandfather, Paul Allman, 72, says he began negotiating with Vantage Homes. "We were talking about something in the $15,000 range," Allman recalls.
One of Vantage's competitors, Ten Bridges Real Estate, approached the girl's mother, Katrina Giese, who was divorced from the girl's late father and had no legal right to the house. She says Ten Bridges hounded her.
"They just wouldn't leave me alone," Giese says. She finally agreed to sell the rights to Ten Bridges for an initial payment of $460 with the promise of another $4,600 if the company bought the house at auction.
The girl's grandparents were irate.
"They got an uninformed young woman to sign away something of considerable value for next to nothing," Paul Allman says. "It's unconscionable."
After consulting a lawyer, Allman decided that Giese had no legal authority to sell the rights, so her sale to Ten Bridges was void. He then sold the redemption rights to Vantage on the girl's behalf for $6,000.
Ten Bridges' owner, Demian Heald, acknowledged his company struck a deal with Katrina Giese. But Heald denies any wrongdoing, saying he believes the girl's mother had the authority to sell the rights.
"The complaint is a tragic, misguided and unfair representation," Heald said in an email.
Vantage bought the house at auction, and Vantage and Ten Bridges are now fighting over the 10-year-old's redemption rights in Multnomah County Circuit Court.
Julius Davee agrees that the $300 Vantage Homes paid him for the redemption rights to his Milwaukie home was better than the alternative—nothing.
But he feels he got hoodwinked out of something of far greater value.
"It sucks," Davee says.
Unsophisticated sellers like Davee are not the only losers. When potential bidders know or fear that a competitor holds the redemption rights to a property, that can discourage them from bidding on a foreclosure.
Alan Brickley, former general counsel for American Title in Portland, has long been familiar with redemption rights. Brickley says when buyers know a flipper holds such rights, that knowledge can defeat the purpose of a foreclosure auction.
"They are artificially reducing the amount of money that should help the lender recoup losses and cover the costs of the judicial system," Brickley says. "That seems inappropriate."
There's no law against trading redemption rights—yet.
In 2017, state Sen. Laurie Monnes Anderson (D-Gresham) introduced legislation that would have prohibited anybody except the original homeowner from exercising redemption rights.
Monnes Anderson introduced the bill at the request of a constituent who bought a foreclosed property at auction and was then approached by a flipper who wanted to sell him the redemption rights.
The bill did not get a hearing.
Consumer advocates say the market for redemption rights is an unintended result of troubles in the mortgage market and serves no purpose.
"How does it benefit anybody that they take these rights and convert them to a commodity and trade them?" asks Shearer, the Portland consumer lawyer. "There's just no social utility in that at all."
Do Not Read This Fine Print
How did the little-known clause called "redemption rights" become a hot commodity for house flippers? It's complicated.
There are two common types of property foreclosures: judicial and nonjudicial. During and after the great recession that began in 2007, foreclosures skyrocketed because many homeowners had taken on mortgages they could not pay, a problem that worsened as property values tanked.
Historically, when lenders pulled the plug on homeowners in Oregon, they did so with what's called nonjudicial foreclosure, which was cheaper and faster than taking homeowners to court.
But as lenders bought and sold mortgages like commodities prior to the recession, they often cut corners and failed to record legal documents properly. When distressed borrowers sought loan modifications or information, they sometimes struggled to figure out who held their loans.
In 2013, an Oregon Supreme Court ruling on how mortgages are recorded curtailed nonjudicial foreclosures.
Lenders shifted to judicial foreclosures, conducted in sheriff's offices. The big difference: Unlike nonjudicial foreclosures, judicial foreclosures come with a guarantee of redemption rights. About half of U.S. states have laws that allow redemption rights, with redemption periods ranging from 30 days to two years.
"The Supreme Court decision changed everything," says Alan Brickley, former counsel for First American Title. "Before that, there wasn't much of a market for redemption rights."
The journey of one house, on 6613 SE May St. in Milwaukie, through foreclosure.
July 1, 2016: Julius Davee sells his redemption rights to Vantage Homes for $300—which promises him $2,200 more if Vantage buys the home at auction.
May 10, 2017: Vantage records the purchase of its redemption rights, which signals to prospective buyers that Vantage can choose to take ownership of the home for up to 180 days after auction.
June 8, 2017: Vantage has controlled the house for nearly a year. But an affiliate company, Sean John LLC, buys the home at a Clackamas County sheriff's auction. Davee doesn't get the additional $2,200.
June 23, 2017: Vantage legally transfers the redemption rights to Sean John, so Sean John will have clean title to the home.