Mike, I have never heard of any lender that holds first position would let the house go for less than what is owed at the auction. The lender is typically represented by an attorney that bids the payoff plus in Florida $100.00 then opens to the floor for bids. Additional lien holders then can reporesent their position in either taking the house back or being out bid by another lien holder or buyer. The foreclosing party begins the bidding process then anyone is allowed to bid.
If there is a second mortgage or other lien holders and the sales price does not make them whole they have the option to pursue a judgment on the homeowner.
If the property sells for more than all liens and judgments the person holding title to the property is entitled to the money minus court fees, but do not expect to get it back fast and there is paperwork required to be filed. let me know of an instance where at a foreclosure auction the property sells for less than the foreclosing party is owed.
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