[SeeSac]

The principal question will be how aggressively the parents will have to bid in order to win the auction. If they are prepared to pay an amount equal to the unpaid principal balance plus delinquent interest they are likely to carry the day. But if this were the case they probably would have personally refinanced their children's defaulted loan and the foreclosure would never have occurred. In the more likely event that they are not willing to make the lender whole, the lender will purchase the loan at auction and proceed to market the REO property.

The lender will most likely not bid above fair market value which is most probably less than what would make the lender whole. If he purchased at a price that would make him whole, he would then be faced at selling at the market value which would be less than the price he paid for it and also entail additional fees and carrying costs. Most likely the lender would not bid to fair market value unless he felt that the market represented a case for sudden revival.

[irish_links]

The lender will most likely not bid above fair market value which is most probably less than what would make the lender whole.

You may be correct if the sheriff is conducting an open auction. In that case, the lender will have no reason to preclude a winning bid from a third party. If it is a blind auction, the lender will submit a bid that is consistent with the balance of the defaulted debt, purchase the home and proceed with marketing the REO.