Hello, I'm a newbie and recently bought a rental. Now we are looking at a foreclosure to flip but I'm a little nervous about a possible second lien. In doing my title research through the county records I found a "bill of sale" drawn up by an attorney of an LLC that I believe the homeowner may have been employed by. It basically said that the homeowner defaulted on a loan and the debtor had rights to his collateral (which is preferred units in the LLC and "all cash, securities, payments, distributions and other property at any time and from time to time receivable or otherwise distributed.") The loan amount wasn't mentioned, nor the actual property address...only says that because the individual was in default, they were aquiring the rights of debtor in the collateral (which did not explicitly mention the property we are looking at).
There was also something recorded with the TX UCC showing that the LLC was a secured party for the same general collateral paragraph that doesn't specifically mention the address of the property. Wells Fargo had the mortgage on the property and is foreclosing on the owners.
If we purchase the house at foreclosure auction from Wells Fargo, does this "secured party" have any rights to the property? I appreciate any advice! We've talked to friend at a title company and also a friend who is an attorney. Both seemed to dismiss this and caution us more to the risks of buying a foreclosure property like concrete poured in drains, etc. Thanks in advance!!
Match the trustee on the NOD to the exhibits on title to see who is foreclosing. If the foreclosing entity is ahead of everyone else on title, that's the senior lienholder and the one you want foreclosing (All things being equal) if you are planning on bidding at sale. Anyone behind the foreclosing entity gets wiped out...eventually.
While completely normal and quite probable for second/junior lienholders to step up and foreclose knowing they have to content with the senior lien, they are only doing so if the math tells them they will recover more foreclosing than the risk of getting nothing or less by not foreclosing.
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