If the roof leaks and tenants are raising heck, and the borrower is responsible for any deficiency in the end, the bank may prefer to empty the place and sell the building, that happens.

Consider too, the property could have been pledged on a commercial loan and the judgment for the million plus can arise from other debts, not just a mortgage.If the property value is well under that judgment, it's obvious the home was additional collateral.So, no, you don't have to bid a million plus, unless that is the entry bid by the lender, that would put the auction in question, but that's another issue if the property is not worth near that amount.The lender can sell the property for a satisfactory bid, near market and seek the deficiency remaining.

If for some reason they could not be made whole they can pursue a deficiency judgement and then have the ability to attach liens to property and garnish wages ect to recover losses.

If your mother still owns the home, she needs to a short sale, unless the loan is non recourse, or there is no deficiency by state law.

Since the well is on your property and could be used in the future, if it was  me, I'd call an experienced well driller in to correct any deficiencies and secure the surface.

Lender gets house for 1 dollar and then can go after borrower for a deficiency judgement!!!

Protecting the homeowner is my biggest concern here, and I'd hate to see someone get slammed with a huge deficiency judgement and ruined financially (even more than they are) because I didn't know what I was doing, you know?

In that case, and depending on the state, they might seek a "deficiency judgement" for the difference between what they were owed and what they got from the sale."

As to people living rent free, there are deficiency amounts that will be filed and while someone in Ca, might live in a home for a couple years, that person would not be in a foreclosed property for more than 60 days in Mo.

Does your state allow for deficiency collection rights?