1. The bank usually order a BPO (broker's price opinion)to decide the listing price. In most cases, the bank accept as low as 80% of the BPO. But I believe BOA accepts 90% of the BPO.
2. If the previous mortgage is less than the market value, the bank will accept the mortgage value, otherwise, the market value.
3. Yes. You do have a chance as the auction is usually the last chance the bank can get rid of it. But nothing for sure.
4. In the auction, be careful of the other bidders. Some of them may the employee of the auction company and IT IS LEGAL for their employee to bid against you in some states. Setup a number in your mind and do not bid more than this number.
