Purchased a 2nd Mortgage at Foreclosure....
Sorry in advance if this is posted in the wrong section, my iPad is not letting me view all the forum sections is the drop down.
Let me preface this post by saying that I am extremely green to real estate investing... fluorescent in fact. Today I purchased my very first foreclosure. The price was too good to be true (~$10k), so I had a strong feeling that another shoe would be dropping soon. It did. After speaking with a Sr. Title Officer, I found that apparently I had purchased a 2nd Mortgage that was defaulted on. The 1st Mortgage has also sent a Notice of Default. I know that more due diligence should have been done in advance with Title, so lesson learned. Fortunately, having this sum tied up is not a big hit... so my hope is simply to not lose any money, and chalk this up to a great learning experience on my journey. Hopefully, I can still see some (even if it's modest) upside to my purchase.
So I have some questions that I am hoping to get some advice on. First off, I am in California, and this transaction also happened in CA on a local property (for what that's worth).
My questions are as follows:
- Being that the 2nd mortgage lien that I now own is in 2nd position... are there ANY benefits that would help me in paying off the 1st Mortgage and taking ownership of the property?
- It's my understanding that if the 1st Mortgage goes to auction and I win that... (so long as there are no other liens), I would then own it outright. Is that correct?
- If another investor swoops in and wins the auction on the 1st (assuming that is does go to auction)... it's my understanding that the new owner of the first would still need to settle up with me on my 2nd for the title to be free and clear. Is that correct?
- If this never goes to auction... what are my rights? Am I stuck with worthless paper? Would I need to sell this to a debt collector? What are my options?