Second mortgage foreclosing and claimed priority over first, bidding

[Allan B.]

I see an instance where a property has two mortgages, Mortgage A (by Bank A) recorded earlier, and Mortgage B (by Bank B) recorded later. Mortgage B does not have any subordination language, nor does it indicate HELOC language. An no additional financing or subordination agreements are recorded.

Strange thing is, Bank B is foreclosing on this property, naming Bank A as defendant, claiming it has superior interest against all defendants (including the listed Bank A).  It appears that Bank A has not responded to the complaint, and the foreclosure judgement was been executed, scheduled for an auction date soon.

In this case, will a third-party buyer get a free and clear title (not subject to First Mortgage) if they win the auction?

Assuming auction takes place, and third party wins, can Bank A realize its mistake and file an appeal later on?