First Lien and Second Lien Foreclosure

[JK Ellison]

In a given month, if both (the first and the second) liens are foreclosed by two different trustees, who gets the title in the following scenarios:

1. The first is purchased by a 3rd party but the second goes back to the lender.

2. The first is purchased by a 3rd party and the second is also purchased by a different 3rd party (not likely but just consider this hypothetical case).

Anything special to watch out in such a case?

[George Roddy, Jr.]

Jk,

If a 3rd party investor/lender buys the 2nd lien at 10am at the auction then they own the property.

If a 3rd party investor/lender buys the 1st lien at 11am at the auction then they own the property and the 1st WIPES OUT the 2nd lien bidder.

Caution: If you are buying a 2nd lien, make sure the 1st isn't foreclosing the same day, or you will basically be throwing away money.

George

[Rafael Nunez]

Hello George,

I came across a similar situation in this months foreclosure auction listings, the 2nd lien is being foreclosed on this month but I believe the 1st lien was presented in auction two months prior. My question to you would be regarding ownership of property and something odd I seen in the title.


I can email you the address if you can please advise. Thank you
nunezlawncare@aol.com

[Steve Smegner]

I am assuming that none of these liens are tax liens. If the 1st lien actually foreclosed 2 months prior the 2nd lien is invalid. There are a couple of scenarios that could be working.
First, the 1st lien may have foreclosed and the new lien holder did not record the deed.
Second, the 1st lien may have been posted for auction but didn't actually sell. If the 2nd lien has cross-default provisions (which most do), once the 2nd lien discovered the 1st lien was foreclosing it could have reinstated the 1st lien and then foreclosed on the 2nd lien.
Third, the 2nd lien holder could have posted for auction which would have happened weeks earlier. Then discovered the 1st lien was foreclosed therefore the 2nd will not show up to the auction.
This is a good example of why it is important to get updated payoff amounts and check the strike-off reports.