SAN DIEGO -- Every weekday morning, investors and on-lookers gather at the courthouse steps in downtown San Diego as dozens of defaulted properties are auctioned. The process is called "sitting the wall."

Doug Mauro watched his $600,000 family home go to the highest bidder for half of what he paid for it.

"You're humbled; you don't really want to tell anybody. You feel ashamed, like you got taken," he said.

Mauro lost the home after losing a very high-paying job. He would've loved to have bought it back himself at the auction for the lower price.

"I would've, if I had the cash," he explained.

He didn't have the money, and even if he did, most banks wouldn't allow it, said Mark Goldman, a real estate instructor at San Diego State University.

"Banks are reluctant to reward borrowers who have defaulted on them," he said.

But the 10News I-Team found not all customers are treated equally. Some big customers get big breaks, for example, Brookfield Homes based in San Diego.

Brookfield was involved in a real estate transaction involving a development called Audie Murphy Ranch. It included 1,000 vacant acres in Menifee Valley, Riverside, about 45 minutes north of San Diego County.

Records the I-Team obtained showed the land was purchased by affiliates of Brookfield and Woodside homes mostly in 2005. The market collapsed, and the buyers defaulted on a $75 million loan from Bank of America.

The land went to public auction, again on the downtown courthouse steps. However, in this case, a Brookfield affiliate was able to buy the property back, at a substantial discount of $17 million.

In a statement to the I-Team, Shane Pearson from Brookfield said, "Bank of America was aware that a Brookfield affiliate ... would be bidding on the property."

He said Brookfield paid additional money to Bank of America outside of the foreclosure process to make good on part of the defaulted loan.

Goldman said he's not surprised, repeating the old real estate adage, "If you owe your bank $100,000, that's your problem. If you owe your bank $10 million, that's their problem."

With the bailout, the bank's problems are also taxpayers' problem. That's why what the I-Team found caught the attention of a Washington, D.C.-based watchdog group.

"There is very little oversight to the TARP system," said Steve Ellis of Taxpayers for Common Sense. His group has been monitoring the bank bailouts, including the $45 billion given to Bank of America.

"These developers are manipulating the system to their advantage and the banks are going along with it," Ellis said.

The I-Team found a similar example in Chula Vista with 165 lots of vacant land in the Otay Ranch neighborhood.

Otay Ranch Eighteen, LLC, defaulted on a $19 million loan on the land, according to public records the I-Team obtained. The loan was held by KeyBank, which also received taxpayer bailout money.

At public auction on the courthouse steps, Montecito Village, LLC, bought the same land for $3.8 million.

In a statement, Montecito Village said it "has no ownership nor common owners or affiliation with Otay Ranch Eighteen, LLC. Furthermore, Montecito Village, LLC, its owners and affiliates have not defaulted on any loans or obligations."

The I-Team learned the two company offices are located on the same block in Newport Beach.

James Baldwin is CEO of Otay Ranch Eighteen, LLC, and Alfred Baldwin is CEO of Montecito Village, LLC. They're brothers, and both have been prominent developers in Chula Vista, specifically Otay Ranch.

The I-Team contacted both Bank of America and KeyBank for their response to the story.

KeyBank told the I-Team that they are taking "vigorous action to protect our shareholders -- by using every legal avenue available to collect our money from James P. Baldwin and Forstar, LLC, both of whom guaranteed the payment of a loan KeyBank extended to Otay Ranch Eighteen, LLC, in the original amount of $21 million."

Shirley Norton of Bank of America confirmed that "it does not allow homeowners to purchase their home in a foreclosure sale," but offers programs to avoid foreclosure.

The bank also made a distinction between commercial loans and consumer real estate.

Speaking specifically about the Brookfield land in question, the bank said it "cannot limit or restrict who is permitted to attend or bid at a PUBLIC auction." The statement goes on to say, "This property was exposed to market forces and was sold at market price." Bank of America confirms that Brookfield made additional payments outside of foreclosure to reduce the $75 million loss. However, the terms of those extra payments are confidential.

See the full statements from Bank of America, Brookfield Homes, and Montecito Village, LLC below.

KeyBank:

Key is taking vigorous action to protect our shareholders - by using every legal avenue available to collect our money from James P. Baldwin and Forstar, LLC, both of whom guaranteed the payment of a loan KeyBank extended to Otay Ranch Eighteen, LLC in the original amount of $21 million. As part of that process, the property went to auction.

This property was sold in a public foreclosure sale held in accordance with California real estate law. It is important to note that such a sale is open to the public and anyone can show up and bid on the property. A notice is sale published in the local paper, and KeyBank is precluded from obtaining information about the bidders or publishing credits prior to the sale.. Key does not know the identity of the successful bidder until the sale is completed and the deed is recorded.

Bank of America:

Bank of America does not allow homeowners to purchase their home in a foreclosure sale. Bank of America has many home retention programs that will help the homeowner make the mortgage payment more affordable and avoid foreclosure.

What you seem to be asking about is a commercial real estate transaction, though you also mention consumer real estate. They are quite different. To discuss consumer and commercial transactions in the same story is really mixing apples and oranges. They are not at all the same.

It is not quite clear what the premise to your story is, but let me provide some background that might be helpful.

As you may know foreclosure sales in California are public events, run by an independent trustee and governed by a straightforward legal process. Sales are advertised well in advance and anyone can attend the foreclosure sale and bid on the property. An independent trustee conducts the auction, and the highest bidder prevails. The lender may bid but is not obligated to do so.

It is entirely up to the party doing the bidding how much they are willing to pay, based on their perception of the property value. There is no minimum or maximum bid at the sale. This property was exposed to market forces and was sold at market price.

FYI, the Bank cannot limit or restrict who is permitted to attend or bid at a PUBLIC auction. It is an open process, with California statutes governing the process.

That is what happened in this instance. Notices for the foreclosure sale were published in advance, as required by California law. And several bidders attended that sale, including Bank of America. However we were outbid by Sutter Mitland.

In Brookfield's response, they point out to you that repayment of the loan involved not only proceeds from the foreclosure, but other payments as well. The terms of that settlement are confidential and we cannot discuss them. Reporting on that transaction with only some of the details and partial information could result in inaccuracies and misinformation.

Brookfield Homes:

Dear Ms. Reynolds,

Your questions have been forwarded to me and I thank you for the opportunity to respond. Please allow me to explain the situation surrounding the Audie Murphy Ranch property. I believe it will fill in a good number of details you are missing.

Question - According to records, the bulk of the land in Menifee Valley was purchased by Brookfield Land for roughly $70,000,000 and financed by Bank of America.

Audie Murphy Ranch was purchased by a Limited Liability Corporation (the "LLC"). The members of that LLC were Alameda Investments, LLC (an affiliate of Woodside Homes) and Audie Murphy Ranch LLC (an affiliate of Brookfield Homes Corporation ("Brookfield"). The Woodside affiliate was the managing member in the LLC. The LLC arranged financing for the purchase and development of the property through Bank of America. When the real estate market crashed, Woodside Homes and its affiliates were forced to go into bankruptcy.

Question - The loan was defaulted. The unpaid debt was $75,363, 100.77.

With Woodside Homes in bankruptcy, they were unable to make payments on the Bank of America loan. Brookfield offered to continue to make payments to Bank of America so long as the payments made by Brookfield would be attributed to Brookfield's obligations and not to Woodside or the LLC. Bank of America did not accept this arrangement. Therefore, if Brookfield continued to make the loan payments, Woodside would have been credited with part of each payment made. Brookfield could not make loan payments for a third party, especially a third party in bankruptcy.

Question - At Trustee Sale No. 1424-40 on March 4, 2009, the buyer was Sutter Mitland 01 LLC. The purchase price was $17,109,867.00.

At the public foreclosure sale, on the courthouse steps, Bank of America bid on the property. An affiliate of Brookfield bid an amount higher than Bank of America. The Bank did not bid a higher amount. No other party present (and a number of parties were present) offered a bid. So, an affiliate of Brookfield bought the property in the public auction. The name of the Brookfield affiliate that took title to the property is Sutter Mitland 01 LLC. This company is a Brookfield subsidiary. Bank of America was aware that a Brookfield affiliate was going to be at the auction and was informed that it would be bidding for the property. There were other property owners, land brokers and interested parties at the foreclosure sale. Brookfield personnel were there to bid on the property and if (when) we won the bid, handle the associated paperwork.. Brookfield had provided Bank of America with a guarantee for its portion of the loan on the property and outside the foreclosure transaction, Brookfield has made good on its obligation to Bank of America. We firmly believe, if Bank of America was asked about this transaction and Brookfield's involvement, Bank of America would respond that Brookfield stood by its obligations and they continue to consider Brookfield a valued customer.

Question - What exactly is your firm's relationship with Sutter Mitland 01 LLC?

Please see the discussion above.

Question - I would like an interview with someone from your company regarding this transaction.

I hope this information provides you with a clearer picture of the Audie Murphy Ranch transactions.

Montecito Village, LLC:

We appreciate the opportunity to provide you with information in order to insure that you have accurate facts.

Montecito Village, LLC, has no ownership nor common owners or affiliation with Otay Ranch Eighteen, LLC. Furthermore, Montecito Village, LLC, its owners and affiliates haven't defaulted on any loans or obligations.

We are confident you will accurately report the fact that Montecito Village, LLC, the purchaser of the property, is not owned or affiliated with Otay Ranch Eighteen, LLC, the entity that defaulted on its loan. We believe this statement is responsive to your inquiry and therefore see no need to be interviewed for this story. Should you possess any tangible evidence that may appear to contradict these facts, please provide us an opportunity to refute such erroneous information.

I am sure you share our goal to portray these facts accurately. Again, thank you for the opportunity to set the record straight.