542
Opinion of the Court
needs of lenders and borrowers. All States permit judicial foreclosure, conducted under direct judicial oversight; about half of the States also permit foreclosure by exercising a private power of sale provided in the mortgage documents. See Zinman, Houle, & Weiss, Fraudulent Transfers According to Alden, Gross and Borowitz: A Tale of Two Circuits, 39 Bus. Law. 977, 1004-1005 (1984). Foreclosure laws typically require notice to the defaulting borrower, a substantial lead time before the commencement of foreclosure proceedings, publication of a notice of sale, and strict adherence to prescribed bidding rules and auction procedures. Many States require that the auction be conducted by a government official, and some forbid the property to be sold for less than a specified fraction of a mandatory presale fair-market-value appraisal. See id., at 1002, 1004-1005; Osborne, supra, at 683, 733-735; G. Osborne, G. Nelson, & D. Whitman, Real Estate Finance Law 9, 446-447, 475-477 (1979). When these procedures have been followed, however, it is "black letter" law that mere inadequacy of the foreclosure sale price is no basis for setting the sale aside, though it may be set aside (under state foreclosure law, rather than fraudulent transfer law) if the price is so low as to "shock the conscience or raise a presumption of fraud or unfairness." Osborne, Nelson, & Whitman, supra, at 469; see also Gelfert v. National City Bank of N. Y., 313 U. S. 221, 232 (1941); Ballentyne v. Smith, 205 U. S. 285, 290 (1907).
Fraudulent transfer law and foreclosure law enjoyed over 400 years of peaceful coexistence in Anglo-American jurisprudence until the Fifth Circuit's unprecedented 1980 decision in Durrett. To our knowledge no prior decision had ever applied the "grossly inadequate price" badge of fraud under fraudulent transfer law to set aside a foreclosure sale.6 To say that the "reasonably equivalent value" language in
6 The only case cited by Durrett in support of its extension of fraudulent transfer doctrine, Schafer v. Hammond, 456 F. 2d 15 (CA10 1972), involved a direct sale, not a foreclosure.
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