The home was reportedly listed as a power of sale, which differs from a regular home sale. The clause is usually written into a mortgage note that authorizes the mortgagee to sell their property in the event of default to repay the mortgage debt.
As a result, the lender forces a sale on the public market and gets all the funds owed to them, while the current owner gets to keep any excess profit. In a foreclosure scenario, the lender usually takes ownership and gets to keep all the profits from the sale.
I bet the former owners initially made an $800,000 down payment. The timeline of price drops was rapid, just over a matter of months, so I'd guess the low selling point was probably pushed through by the bank trying to recover the money they lent as quickly as possible.
