FAYETTEVILLE — Circuit Clerk Bette Stamps walked outside her office at the Washington County courthouse ready to fulfill her role as a sales commissioner.
“Is there anyone here for the 10 o’clock sale?” Stamps asked.
No one responded, and Stamps moved quickly through the process of conducting a judicial foreclosure auction. Within a few seconds, she announced that she was accepting a bank’s $95,000 bid on a Springdalehouse, earning herself $95.
About 15 minutes later, Stamps went through the same procedure, accepting Arvest Bank’s $127,393 bid for property in Springdale and earning another $127.
The process was a snapshot of the fast-paced, busy world of judicial foreclosure auctions in Arkansas that rewards circuit clerks working as sales commissioners in ways unlike other states.
Officials elsewhere said last week that they were unfamiliar with Arkansas’ system of paying one-time fees to sales commissioners, describing it as unusual andsaying it’s far different from how their states handle foreclosures.
Arkansas law allows a sales commissioner, who is most often the elected circuit clerk, to collect one-tenth of 1 percent of a property’s sale price.
The formula allowed Stamps on Tuesday morning to earn $222.
“I’d have some ethical concerns,” said Diane Fremgen, former president of the Wisconsin Clerks of the Circuit Court Association and the Winnebago County circuit clerk. “There are peo-ple who are in really terrible situations. Why should anyone profit from that?”
Fran Satterwhite, president of the Association of Circuit Court Clerks of Indiana, said the only money an Indiana circuit clerk receives on top of salary is $2,000 a year for being in charge of voter registration.
“We can’t even charge if we marry somebody,” Satterwhite said. “The taxpayers put us here. That’s part of our duty.”
ALLOWED BY LAW
The Arkansas Democrat-Gazette first wrote on Oct. 3 about Arkansas Code Annotated 21-6-412, pointing out how Northwest Arkansas’ high number of judicial foreclosures allowed Stamps to earn $104,458 last year in addition to her $80,459 salary.
Benton County Circuit Clerk Brenda DeShields is on pace to earn more than $100,000 in sales commissioner fees this year on top of her $73,586 salary. She made $24,100 on Sept. 28 when she sold 10 Pinnacle Point buildings for $24.1 million.
The clerks have said they are only collecting what is allowed by state law.
“There are situations in which adhering to the letter of the law is inconsistent with commonly accepted views of ethics,” said Howard Brill, the Vincent Foster professor of professional responsibility at the University of Arkansas at Fayetteville’s School of Law. “As a taxpayer, I was personally shocked to hear of the clerks receiving awards of this size. I don’t know that it violates any precise ethical standard, but I was dismayed.”
Records kept by the Arkansas Bureau of LegislativeResearch and archives from the Arkansas Gazette show various fees were established in 1875. The first mention of paying one-tenth of 1 percent to foreclosure sales commissioners was in legislation proposed in 1917 by Sen. HarryL. Ponder, a Walnut Ridge attorney who represented portions of Randolph, Lawrence and Sharp counties.
Now, state Rep. Eddie Cheatham, D-Crossett, vice chairman of the House State Agencies and Governmental Affairs Committee, plans to submit a bill next month, recommending that most or all of the commission fees go to a county’s general fund.
Other legislators, including state Rep. Uvalde Lindsey, D-Fayetteville, oppose paying circuit clerks for conducting the sales. County governments should decide, he said.
“If [circuit clerks] are to be compensated for handling the sales and there are lots of them, it’s the quorum court’s decision,” Lindsey said.
OTHER STATES
Cheatham said he hasn’t compared Arkansas’ system with how other states handle judicial foreclosures and who gets paid for various chores.
In other states, there’s nothing quite like the fees that go to circuit clerks conducting such sales.
Charles Miller, senior vice president and legislative director for the Arkansas Bankers Association, surveyed bank associations across the nation, receiving 19 responses. None of those states gives personal income to circuit clerks or other people who handle foreclosure sales, he said.
The newspaper determined sheriffs or sheriff’s office employees in Louisiana, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Utah and Wisconsin conduct foreclosure sales. They don’t get paid personal income for the work, but some sheriff’s offices do receive money for conducting the sales.
“It’s part of their job description to describe the property and ask for bids,” said Wanda Knutson, president of the North Dakota Clerks Association and the Mercer County District Court clerk.
Pennsylvania sheriff ’s offices collect a “poundage” fee that’s equal to 2percent of a property’s sale price. The money goes to a county’s general fund, said Capt. Robin Ketchem of the Greene County sheriff’s office who oversees foreclosure sales.
North Dakota sheriff’s offices receive $75 for each sale. In South Dakota, it’s $20 if the property sells for $1,000 or less, and $50 if it sells for more than $1,000.
Louisiana sheriffs collect a 3 percent fee on “immovable property,” according to state law. The money goes to the sheriff’s office, not the sheriff.
Oklahoma sheriffs collect $50 for conducting a sheriff’s sale and the money funds an account that pays for such things as bullet-resistant vests and police radios, said Ray McNair, deputy director of the Oklahoma Sheriff’s Association.
Sheriff ’s offices in Ohio make $75 for every foreclosure sale, said James Bitterman, achief deputy who oversees the foreclosure auctions in Cuyahoga County. Bitterman said he didn’t know about Arkansas’ system.
“That’s insane,” Bitterman said. “I can’t tell you how rich I would be with all the sales up here and if Cleveland was in Arkansas. I can’t begin to imagine.”
In Hillsborough County, Fla., employees in the county circuit clerk’s office conduct 100 judicial foreclosure auctions on busy days, charging a $60 fee for each one. The fee, which is charged statewide, goes to the state, said Dale Bohner, the county office’s legal counsel.
In Utah, Davis County Recorder Richard Maughan said a clerk or sheriff receiving payment for conducting a foreclosure auction wouldn’t go over well.
“The government official is conducting the sale?” Davis said. “He gets a cut? That’s bad press.”
Northwest Arkansas, Pages 17 on 10/31/2010