Foreclosure Sales On Both 1st & 2nd DTs A Week Apart. Now What??
TRUE STORY in progress! You got foreclosing lender A with a $30k 2nd Deed of Trust (mortgage) on a property with the sale scheduled June 15. You got foreclosing lender X with an unpaid $55k 1st Deed of Trust on the same property with the sale scheduled June 25. So what can now happen after the the lender A sale on June 15??
Lender A can get a Trustee's Deed to the property (an REO) if there are no other bidders. Or a higher bidder can get a Trustee's Deed to the property. In both cases, the 2nd DT lien is wiped out and they have a deed to the property. However, it is still subject to the 1st Deed of Trust that still exists!
Now, the June 25 foreclosure sale is held. The winning bidder from the June 15 sale with the Trustee's Deed can bid at this sale but why would they? Just to prevent anyone else from wiping out the 1st lien and getting another Trustee's Deed? It seems like that is their only choice. However, if there is a new, different party that is the high bidder (such as myself), I assume they will get a Trustee's Deed as a result. Now you got two parties with each having a Trustee's Deed. Both Deeds of Trust liens are now wiped out but WHO HAS TITLE? It seems somewhere along the line someone is on thin ice.
It appears to me that the earlier June 15 sale should be cancelled by lender A since I can't see how they can benefit from going forward with it. I am interested in bidding but don't know how to proceed. I will definitely stay away from the June 15 sale since it doesn't wipe out the 1st lien. But then can I safely bid at the June 25 sale and get good title? Your thoughts please. Thanks...