Now I am wondering, what regulatory mechanism exists to prevent banks and realtors from teaming up and selling the foreclosed homes to their friends for a song? Who can I talk to about this? The free market is being prevented from working and us taxpayers are paying for insiders to get cheap homes.
I am interested in pursuing this to the hilt. It has the potential to wreck the financial system.

Welcome to the new Soviet, comrade. Good housing is for political insiders only. The rest of you get the dregs. The parallels to the old USSR are amazing. Instead of the communist party system we now have a crony capitalist system where the insiders game everything to advance themselves at the expense of the rest of us. The colors are different but the results are the same.