I'm going to try to make this clear as mud, so bare with me!

Person A took out a mortgage (#1) and bought house in 2000. In 2003, Person A took out a second mortgage (#2). 

In 2014, Person A defaulted on mortgage #2 and it went to auction at the courthouse steps. Investment company bid and won. Received trustee deed. 

For a little over 2 years, Investment company went through litigation to evict Person A. At the end of 2016, Person A finally vacates the property.

2017, Investment company starts to show the property. They close on the house on April 28, 2017 to Person B. 

April 27, 2017, a notice is filed in the county courthouse for Person A's mortgage #1. Auction to be held in June. 

I'm assuming this means the Investment Company never paid off the 1st mortgage when they assumed ownership of the property. What ramifications does this have for Person B? I'm interested in bidding on the 1st mortgage, but now that Person B is involved (person B also has a lien on the house) I'm not sure what that would mean for the buyer at auction. Has anyone seen this scenario play out? I've talked to a few people already and no one seems to have any experience dealing with something like this. Is a real estate attorney my best bet? I'm hesitant to talk to too many people because its a smaller city and word gets around. The house is in a very desirable neighborhood in an excellent school district.