The point of the auctions are to (a) raise money for local government which can be used for social services, etc., (b) to revitalize the tax base and receive continual income, (c) enable and enforce home maintenance/upkeep, and (d) more quickly turn over neglected properties to the local community.
It's really a great way to increase the tax revenue and strengthen the overall condition of homes in Detroit (many of which have absolutely gorgeous architecture and solid construction). The problem is that not very many people know about this program. There may be an opportunity to organize a bulk purchase of pockets of homes in certain corridors to create a more centralized, visible improvement effort.
I've attached the list of properties subject to foreclosure in 2011 for those interested.