Penny auction (foreclosure)

A penny auction is a collective action taken during the auction of a foreclosed property to force the sale of the property at a low price, with the intent of then returning the property to its previous owner. The process—usually achieved with a combination of intimidation, threats, and physical force—effectively circumvents foreclosure by forcing the lender to relinquish the property without an opportunity to recuperate the balance of the loan.

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The term arose during the foreclosure of farms during the Great Depression in the United States. Neighbors would gather in large numbers at the auction and place bids of only a few pennies, while intimidating anyone who attempted to bid competitively.[1] In the end, the bank that owned the farm would get whatever was bid and the neighbors would return the farm and its contents to the farmer.[2]