Question about 2nd Mortgage Foreclosure surplus
5 Replies
Manuel Sarabia
from El Centro, California
posted about 3 years ago
If the 2nd mortgage(junior lien) goes to foreclosure and there is a surplus of funds after being sold to the bidder, will the Senior lien receive any of the surplus? This is assuming it's the only other lien on the property. There's not much info in regards to surplus funds when the 2nd mortgage forecloses. This would be for California.
Jon Holdman
(Moderator) -
Rental Property Investor from Mercer Island, WA
replied about 3 years ago
Winner at a second mortgage foreclosure gets the property subject to the first. The first is not affected. Any surplus (in your example) goes to the borrower.
Dave Van Horn
Fund Manager from Berwyn, PA
replied about 3 years ago
@Jon Holdman is correct. And i believe if the borrow doesn't claim these funds, the government keeps it.
Brett Goldsmith
Investor from Los Angeles, CA
replied about 3 years ago
Once all lien holders are paid any surplus funds would need to be claimed by the owner.
Jon Holdman
(Moderator) -
Rental Property Investor from Mercer Island, WA
replied about 3 years ago
Sorry, @Brett Goldsmith its more complicated than that. Any senior lienholders are unaffected by a foreclosure. Their liens still exist. Junior lienholders would have a claim on any surplus first, though they may have to take action to make that claim. Then any excess would go to the borrower.
Brett Goldsmith
Investor from Los Angeles, CA
replied about 3 years ago
@Jon Holdman Yes, sorry, you're correct. they'd be purchasing subject to the senior lien holders. I glanced over that it was a subordinate mtg fcl in question.