Pending Release on Previous Owner Mortgage - Title Search Question

[John Rovin]

Hi Community,

I am looking at a property which is foreclosed.

It had below events on property:

1\1\1999 Deed of trust -- Owner1 -- ABC Mortgage1 (Subsequently Released)

1\1\2000 Deed of trust --Owner1 -- XYZ Mortgage

2\1\2000 Release --Owner1 --ABC Mortgage1

1\1\2002 General Warranty Deed With Vendor's Lien
Owner1 Grantor
Owner2 Grantee
Note: Document also mentions about DEF Mortgage being first Lien mortgage

1\1\2002 Deed of Trust --Owner2 --DEF Mortgage

Appointment of substitute trustee on DEF Mortgage to Owner2


Considering above events on property will the XYZ Mortgage of owner1 wipe out when the foreclosure auction happens on "Owner2 --DEF Mortgage" ?
Or what will happen if I buy the property?

Thanks,
John

[Brian Burke]

A foreclosure of the 2002 deed of trust will not wipe out the 2000 deed of trust even though it was a loan to the previous owner. That said, it's likely an error in which the former owner's deed of trust wasn't reconveyed but finding out conclusively is likely difficult or impossible. If the 2002 lender takes the property back and the 2000 loan is in fact still outstanding, they'll have a claim on the lender's policy of title insurance, but you would not have that protection if you were a third party bidder at the foreclosure sale.