Purchase/Assignment Junior Deed of Trust for Redemption Rights After Foreclosure Sale

Foreclosures
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Purchase/Assignment Junior Deed of Trust for Redemption Rights After Foreclosure Sale

John Smith
Member since 2023 · 9 posts · 1 vote

Situation:

A property just sold at foreclosure auction via foreclosure of the senior deed of trust, previously the property was in foreclosure as the second deed of trust was in default but that was withdrawn and then the senior deed of trust foreclosure and sale followed.  The junior deed of trust has an outstanding balance of ~$700k (will be wiped out via the foreclosure) and there aren’t any overbid funds for the holder of the junior deed of trust.

Question:

Now that the auction sale has occurred, is it possible for the holder of the junior deed of trust to sell / assign / grant the junior deed of trust so the redemption rights can be exercised to purchase the property?  We’re interested in purchasing the property and want to acquire the redemption rights by purchase/assignment of the junior deed of trust.

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
2y
Quote from @John Smith:

State is Colorado - we have no owner right to redemption here anymore (post 2008).  We were late to the initial auction and wondering if there's a path to purchasing the junior deed of trust and redeeming from there?  

It's a higher value property and still a good amount of equity left on the table.

In no state that I know of, does the second mtg holder have any redemption rights after a first mtg foreclosure.
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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y

    I could be wrong of course and I dont know what state your in.. but the redemption rights are for the owner of the property.. they would have to redeem the first and then the second reattaches if there is no redemption the second is removed from the property but the owner who lost it still owes the money on the note and the second can sue on the note for a deficiency.

    Time for the second to act was during the foreclosure sale bringing the first current then foreclosing on their second and taking title that way subject to the owners redemption rights on the second.

    this is how it would play out in Oregon Law.

    so with the information you have given if I wanted that property I would have approached the second tried to buy it for pennies on the dollar I would have cured the first then foreclosed out the second and no one bids ( which is generally the case ) and the property is mind subject to the first.

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    Quote from @John Smith:

    Situation:

    A property just sold at foreclosure auction via foreclosure of the senior deed of trust, previously the property was in foreclosure as the second deed of trust was in default but that was withdrawn and then the senior deed of trust foreclosure and sale followed.  The junior deed of trust has an outstanding balance of ~$700k (will be wiped out via the foreclosure) and there aren’t any overbid funds for the holder of the junior deed of trust.

    Question:

    Now that the auction sale has occurred, is it possible for the holder of the junior deed of trust to sell / assign / grant the junior deed of trust so the redemption rights can be exercised to purchase the property?  We’re interested in purchasing the property and want to acquire the redemption rights by purchase/assignment of the junior deed of trust.


     What Jay said is correct, and also need to check if the state even allows for a deficiency judgment. 

    What state is this in? Also not sure why anyone would redeem this property as they would then be liable for the 2nd position lien potentially, whereas they could just by it from the first if they sell it free and clear. If it was truly worth a lot more it would have sold at auction for more.

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  • John Smith
    OP
    Member since 2023 · 9 posts · 1 vote
    2y

    State is Colorado - we have no owner right to redemption here anymore (post 2008).  We were late to the initial auction and wondering if there's a path to purchasing the junior deed of trust and redeeming from there?  

    It's a higher value property and still a good amount of equity left on the table.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @John Smith:

    State is Colorado - we have no owner right to redemption here anymore (post 2008).  We were late to the initial auction and wondering if there's a path to purchasing the junior deed of trust and redeeming from there?  

    It's a higher value property and still a good amount of equity left on the table.


    I have only bought and sold props in CO  never done foreclosures there so you would need to have a quick chat with either a good title officer if you can.. or an attorney. However if the sale has happened and you say there are NO redemption rights then sounds like who ever bid at the sale is the owner / or it reverted to the lender or who ever owns the debt that was foreclosed.
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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    2y
    Quote from @John Smith:

    State is Colorado - we have no owner right to redemption here anymore (post 2008).  We were late to the initial auction and wondering if there's a path to purchasing the junior deed of trust and redeeming from there?  

    It's a higher value property and still a good amount of equity left on the table.

    In no state that I know of, does the second mtg holder have any redemption rights after a first mtg foreclosure.
    1Reply
  • Ron S.
    Paradise, CA · Member since 2015 · 1k+ posts · 871 votes
    2y
    Quote from @John Smith:

    Situation:

    A property just sold at foreclosure auction via foreclosure of the senior deed of trust, previously the property was in foreclosure as the second deed of trust was in default but that was withdrawn and then the senior deed of trust foreclosure and sale followed.  The junior deed of trust has an outstanding balance of ~$700k (will be wiped out via the foreclosure) and there aren’t any overbid funds for the holder of the junior deed of trust.

    Question:

    Now that the auction sale has occurred, is it possible for the holder of the junior deed of trust to sell / assign / grant the junior deed of trust so the redemption rights can be exercised to purchase the property?  We’re interested in purchasing the property and want to acquire the redemption rights by purchase/assignment of the junior deed of trust.


     Now that the sale occurred, there is no junior, and as a result, there is no junior deed of trust to sell or assign. At this stage, based on your post, you would wait until its listed then contact the listing agent to purchase it.

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