Real estate question - REOs (example cited) (Forest Park, Marengo: mortgage, foreclosures)

[Johnny Northside]

The activity on this property stumps me:

1510 Marengo Avenue, Forest Park, IL 60130 - Prudential American Heritage Real Estate

It was a foreclosure in '06, spent most of '07 on the market as an REO in the lower half of the $200s. Then it was auctioned near the end of '07 and allegedly sold for $189K. But there is no record of a deed transfer at that time. Now it is back on the market at $200K as an REO.

Was the $189K bid a fake meant to drive up the auction bidding, or does the bank openly bid against other bidders to keep the price from slipping too much? For reference, the mortgage in default was a couple of years old and $255K according to public records, so maybe $250K at the time of foreclosure. That means the $189K price was right around the "20% discount" that is supposedly the most banks are willing to eat on a bad mortgage. If they can't give a house away for 20% off in a fairly decent (though getting tugged in two directions) area like Forest Park, I can't imagine what's going on in poorer areas with more foreclosures.

[chet everett]

I don't think it is "fake", some auctions will state "lender will be bidding" but I don't thing they are REQUIRED to disclose that as there is some provision in the banking regulations where the bank can set-up a new buyer with financing and call the whole thing a "conduit" as money is flowing through the auction. Sometimes the new buyer has an out that if they are the only bidder on that property or a whole block of properties (like in a condo or rental/income property) situation no one has to consummate the deal. Don't know if they would do that with a SFD, which what that listing looks like...

Man that place has all the curb appeal on car wash and a basement that only Ed Gein could love...