I’m actually curious about a specific situation within that, when a LOT more is owed on a property than it’s worth. Let’s say there is a property that is reasonably worth $100k but there is over $200k owed on it to the bank via non-payment, interest, whatever. What does the bank do then? There, in theory, will NEVER be a buyer for that property at that price. What becomes of it then?
In: Economics
Here is the answer from another redditor:
> If a bank buys back a house they are in effect setting a minimum bid. They do this as the auction process is required by foreclosure laws which also limit the ways they can deal with the disposition of the house since the defaulting owner still has rights. After they’ve “bought” the house the defaulting owner no longer has any interest in the house and the bank has more flexibility in what they sell the house for or how they sell it.
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