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Foreclosures

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Noah Masa
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Foreclosure opportunity with second mortgage

Noah Masa
Posted Jan 24 2023, 07:51

Hi All,


been looking at a foreclosure property recently that would be in a great location. After going to recorders office, it seems that the first mortgage is the one being foreclosed on, but the owner also took out a second mortgage about 6 years later from a different entity.  If I were to bid at auction, would I be responsible for that second position mortgage? Is there any chance that second company can come after me? 

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Rob Jacobs
  • Real Estate Coach
  • USA
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Rob Jacobs
  • Real Estate Coach
  • USA
Replied Jan 24 2023, 08:02
Quote from @Noah Masa:

Hi All,


been looking at a foreclosure property recently that would be in a great location. After going to recorders office, it seems that the first mortgage is the one being foreclosed on, but the owner also took out a second mortgage about 6 years later from a different entity.  If I were to bid at auction, would I be responsible for that second position mortgage? Is there any chance that second company can come after me? 


 As a buyer at auction, you will usually receive a sheriff deed depending on how your state passes title to you. The current liens stay with the person who signed for the mortgage notes and  cannot pass on to you as the purchaser unless you agree to it in writing.

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Chad U.
  • Investor
  • Boca Raton, FL
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Chad U.
  • Investor
  • Boca Raton, FL
Replied Jan 25 2023, 05:38
Quote from @Noah Masa:

Hi All,


been looking at a foreclosure property recently that would be in a great location. After going to recorders office, it seems that the first mortgage is the one being foreclosed on, but the owner also took out a second mortgage about 6 years later from a different entity.  If I were to bid at auction, would I be responsible for that second position mortgage? Is there any chance that second company can come after me? 

As long as the second position mortgage lender is notified of the foreclosure via standard service process means, then that lien will get wiped at the foreclosure auction. In other words, no you will not be responsible for it.
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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Replied Jan 25 2023, 06:33

Both will be wiped out.