"Last week, the FBI conducted interviews and executed search warrants through the entire Bay Area as part of a long-term investigation of anti-competitive practices at trustee sales of foreclosed homes," bureau spokeswoman Julie Sohn said.
At issue, investigators said, is that some participants are allegedly paying others to refrain from bidding on certain properties to keep their prices low, the San Francisco Chronicle reported Friday.
Such bid-rigging violates the federal Sherman Antitrust Act and can carry a maximum penalty of 10 years in prison and a $1 million fine.
Most properties are returned to lenders at courthouse-step auctions, the final step in California's foreclosure process, but about 20 percent get sold to outside investors.
"There have always been rumors of collusion at the courthouse steps," Sean O'Toole of ForeclosureRadar.com, which provides information on properties sold at the auctions, said.
"If you have a small crowd of guys that talk to each other every day, it's natural for them to say, 'Why are we bidding each other up? Let's just buy this and work it out afterward.'" O'Toole said.
But when he speaks to real estate clubs and others, he said, "I am very clear. I say: 'This is illegal. Don't do it.'"
At an Alameda County auction Wednesday, some investors said they welcomed the FBI's interest.
"This has been going on for many years," one man who declined to give his name said. "It's a closed group that doesn't always allow the properties to go up to their true value."