Another court holds that a foreclosure sale at a very low value (10% of fair market value) is not a problem, does not “shock the conscience” and is not enough to set aside the sale. This case is by the District of Columbia Court of Appeals (the supreme court of D.C., not the federal court with a similar name). Flagstar Bank v. Advanced Fin. Invs., LLC, 333 A.3d 851 (D.C. 2025). The court approved a sale for $26,000 of property worth $256,632.00.
The court explained its reasoning by noting that at the time of the foreclosure sale, the law was unclear as to whether the property was subject to an undischarged mortgage held by a third party. If that were so, the total debts of the homeowner would exceed the value of the property, and the homeowner would have been entitled to nothing in any event. In that light, $26,000 seems pretty good.
It would have been nice for the court to admit that, absent these facts, a foreclosure at such a low price should not be sustained by courts, especially after the Supreme Court’s ruling in Tyler v. Hennepin County, 598 U.S. 631 (2023), which held that the homeowner, not the municipality, had a right to equity in the home after the debt (property taxes) was paid. Instead, the court held (along with many others) that inadequate price is not enough by itself to undo a foreclosure sale, no matter how low the price is, if it is not accompanied by a procedural irregularity.