Should distressed homeowners be allowed to bid on their own foreclosures at bankruptcy auctions?
After all, is it really fair big hedge funds get to come to the auctions, sweep up the best houses and deals, sometimes for 50 cents on the dollar?
(Bankruptcy auctions are where banks sell packages of mortgages. This means the winner has to take all in a package, which sometimes may include the good and the no- so-good houses).
Where does that leave the distressed owner who claims she was deceived into signing a bad loan she was unqualified for in the first place?
Just like a lot of things, this dispute went to court. Judge Christopher Sontchi of the U.S. Bankruptcy Court in Wilmington, Del., heard the case of a Maryland homeowner who wanted justice and the ability to buy her house back at a wildly discounted new price.
So, what about it?
The judge ruled against the distressed homeowner, which wasn’t surprising.
He stated it may not be exactly fair but the homeowner can’t show up at an auction, basically hold everything up, so she can get a good deal on her own home.
In other words, one of the disadvantages of these auctions is you can’t cherry pick. Everything is sold in bulk, which is why it’s an auction. The merchandise needs to be moved fast.