Does satisfying the first mortgage clear out the 2nd LIEN?

Fort Lauderdale, Florida
Foreclosures
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Does satisfying the first mortgage clear out the 2nd LIEN?

David B.
Member since 2023 · 4 posts · 0 votes

Hello,

Purchased a property from the county auction, comes to find out i paid off the HOA foreclosure. there was a mortgage attached. I am in talks with the lender (Wells Fargo) to satisfy this payment. If i satisfy it, will the second lien clear? or will it still be there?

Supposedly the second lien holder is a credit card debt collector, they were listed as the defendant in the foreclosure case.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1y

if the second is recorded before the HOA lien then I dont think it gets wiped out..

but these are state specific.. title company should be able to tell you .. just open up an order and you will see what still survives the sale.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1y

    if the second is recorded before the HOA lien then I dont think it gets wiped out..

    but these are state specific.. title company should be able to tell you .. just open up an order and you will see what still survives the sale.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y

    @David B.

    All depends on state and when that was recorded as if it was in foreclosure it was probably a judgment on record

    Did you not review title or information before buying this at auction? If the hoa is foreclosing you probably also have taxes to pay and the first with default interest and late fees can be significant

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @David B.:

    Hello,

    Purchased a property from the county auction, comes to find out i paid off the HOA foreclosure. there was a mortgage attached. I am in talks with the lender (Wells Fargo) to satisfy this payment. If i satisfy it, will the second lien clear? or will it still be there?

    Supposedly the second lien holder is a credit card debt collector, they were listed as the defendant in the foreclosure case.


     Curious as to why you did not run a title search? Also how much is the first mortgage and is the property even worth keeping?

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  • David B.
    OP
    Member since 2023 · 4 posts · 0 votes
    1y
    Quote from @Chris Seveney:
    Quote from @David B.:

    Hello,

    Purchased a property from the county auction, comes to find out i paid off the HOA foreclosure. there was a mortgage attached. I am in talks with the lender (Wells Fargo) to satisfy this payment. If i satisfy it, will the second lien clear? or will it still be there?

    Supposedly the second lien holder is a credit card debt collector, they were listed as the defendant in the foreclosure case.


     Curious as to why you did not run a title search? Also how much is the first mortgage and is the property even worth keeping?


     I didnt do my DD. BIG rookie mistake and lesson learned. 

    Paid 100k for it. Whats owed is 150k (mortgage and fees). property is worth 185/200. 


    If i satisfied the mortgage, there would be another 40k lien i would have to satisfy so its not worth to buy it directly from the bank.  BUT if i let it go up for auction, and no one bids against me, i can get it clear title for 150k.

    Whats your thoughts?

    0Reply
  • Chad U.
    Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
    1y
    Quote from @David B.:
    Quote from @Chris Seveney:
    Quote from @David B.:

    Hello,

    Purchased a property from the county auction, comes to find out i paid off the HOA foreclosure. there was a mortgage attached. I am in talks with the lender (Wells Fargo) to satisfy this payment. If i satisfy it, will the second lien clear? or will it still be there?

    Supposedly the second lien holder is a credit card debt collector, they were listed as the defendant in the foreclosure case.


     Curious as to why you did not run a title search? Also how much is the first mortgage and is the property even worth keeping?


     I didnt do my DD. BIG rookie mistake and lesson learned. 

    Paid 100k for it. Whats owed is 150k (mortgage and fees). property is worth 185/200. 


    If i satisfied the mortgage, there would be another 40k lien i would have to satisfy so its not worth to buy it directly from the bank.  BUT if i let it go up for auction, and no one bids against me, i can get it clear title for 150k.

    Whats your thoughts?

    As Jay pointed out above, you need to determine whether the credit card lien was recorded before or after the HOA lien. If it was before, then the credit card lien still sticks. However if it was after and they were named in the HOA foreclosure suit then it will be wiped out.  You may want to check with a local title company as to whether they can have an underwriter provide title insurance.
    0Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    1y

    I believe in Florida, HOA liens have priority as of the recording of the declaration of the restrictions except for first mortgages where the lien has priority as of the recording of the lien. (Fla. Stat. 720.385) So if the junior lien holders were properly served, their interest should be extinguished. However, as Jay suggested, ask a title agent for a commitment to issue you a policy and see what they would take exception for.

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  • Ron S.
    Paradise, CA · Member since 2015 · 1k+ posts · 871 votes
    1y
    Quote from @David B.:
    Quote from @Chris Seveney:
    Quote from @David B.:

    Hello,

    Purchased a property from the county auction, comes to find out i paid off the HOA foreclosure. there was a mortgage attached. I am in talks with the lender (Wells Fargo) to satisfy this payment. If i satisfy it, will the second lien clear? or will it still be there?

    Supposedly the second lien holder is a credit card debt collector, they were listed as the defendant in the foreclosure case.


     Curious as to why you did not run a title search? Also how much is the first mortgage and is the property even worth keeping?


     I didnt do my DD. BIG rookie mistake and lesson learned. 

    Paid 100k for it. Whats owed is 150k (mortgage and fees). property is worth 185/200. 


    If i satisfied the mortgage, there would be another 40k lien i would have to satisfy so its not worth to buy it directly from the bank.  BUT if i let it go up for auction, and no one bids against me, i can get it clear title for 150k.

    Whats your thoughts?


     if you let it go to auction by the 2nd lien holder, you get wiped out.

    0Reply
  • Connor Hibbs
    Lender · Ellington, CT · Member since 2024 · 210 posts · 103 votes
    1y

    I don't believe it would clear it, but you should check with the title company to confirm. This could be something that varies state to state or county to county.

    0Reply
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