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.
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.
@Jon Holdman is correct. And i believe if the borrow doesn't claim these funds, the government keeps it.
Once all lien holders are paid any surplus funds would need to be claimed by the owner.
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.
@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.