Prospective buyers look over the home in foreclosure at 2 Valley View Drive in Johnston. As it turned out, the auction sale scheduled for 11 a.m. on May 29 was canceled at the last minute.

The Providence Journal / Bob Thayer

Last fall, Brenda Holder and Linda DeCiccio wanted more time to sell their late father’s Johnston home to avoid the “disgrace” of a pending Oct. 7 foreclosure by the Bank of America.

But today, they are wishing the bank would get the foreclosure accomplished without further delay.

Their feather, Louis J. D’Iorio, who died in January 2008, at the age of 94, had received an estimated $196,930 in a reverse mortgage on the house; these types of loans are due and payable when the owner dies or sells the house.

Reverse mortgages are loans made to homeowners 62 and older who want to tap into the equity of their houses while they are still living in them.

Last fall, Bank of America granted an extension, but the sisters have been unable to sell the 1961 contemporary house at 2 Valley View Drive.

They eventually became resigned to the idea of a foreclosure, and debated whether to even attend the auction planned for Friday, May 29.

They ended up traveling to the house on that rainy morning, where three potential bidders were waiting for the scheduled 11 a.m. auction to begin.

Holder and DeCicco knew two of the bidders, who have been interested in the house for some time — Andrea Castaneda of Providence, and Tarek El Heneidy, of Rockport, Mass.

Castaneda said she appreciates mid-century modern architecture and furnishings, and she thinks the house is “special.” It was designed by Holder and DeCicco’s uncle, Americo Mallozzi, a graduate of the Rhode Island School of Design.

El Heneidy said his wife is a Rhode Island native and they are interested in purchasing a house here.

The third bidder, Richard DiSarro, of Johnston, who attended with his father, said he is a private investor.

But 11 a.m. came and went with no word, or appearance, by any representative of the bank or from Harmon Law Offices of Newton, Mass., which had published the auction notices.

Holder said that since the auction was canceled, she and her sister have learned that a question about the title caused a delay.

The title question involved their late mother, Irene D’Iorio, who died in April of last year, about three months after their father died.

Holder said she believed the bank has all the information it needs, and was puzzled and frustrated by the delay.

“Now this has to be done all over again, and Bank of America is continuing to collect,” said Holder, who noted that interest and fees continue to accrue on the loan.

“The longer they wait to sell this house, the more money they’re going to make,” Holder said.

Reverse mortgages that are insured by the U.S. Department of Housing and Urban Development are known as home equity conversion mortgages. HECM loans account for an estimated 95 percent of the reverse mortgage market.

Because D’Iorio’s loan was HUD-insured, the estate would not be liable should the house sell for less than the outstanding loan balance.

Last fall, the asking price on the house was $339,000, and the assessed value was $326,100.

As of last Aug. 1, Holder estimated that the reverse mortgage loan balance was $289,999 — which included $196,930 in borrowed money, $20,399 in closing costs (her father had two closings) and $72,670 in interest charges.

Holder said she believes the outstanding balance is now over $300,000.

Since 2004, 1,911 HECM loans have been made in Rhode Island, and only 16 of them have gone into foreclosure, according to Nancy Smith Greer, director of the HUD’s Providence field office. Greer said that HUD has had to pay a claim on 133 of the loans, a possible indicator of an “upside-down” sale, when a house is sold for less than the outstanding mortgage.

Greer said HUD can refuse to pay entire claim amounts if it determines a foreclosure was not performed in a timely manner.

cdunn@projo.com