Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
Suppose there is this property:
FMV 200k
1st lien 125k (with arrears)
2st lien 25k (current)
Mechanics Lien 5k.
1st one is foreclosing. Suppose someone bids 170k at the foreclosure auction - I understood that the first is paid off, and the seconf is paid off, and even Mechanics Lien paid off and the balance (15k) is due to the HomeOwner.
1. Long story short, just want to understand what happens with the second or third mortgage when there is enough money to pay them off and when there is not?
2. Is there a certain legal action that second and third lien holders can make to protect their interest once the first one files an NOD (suppose that the first one was behind, second mortgage was current) - so that when the property is sold at the courtsteps second and third position liens are paid.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
Varies from state to state. Here is CO, if it sold for $125K, the second and third would have redemption rights. The second could buy the property from the auction winner for $125K. If they don't, their lien is wiped out. Same for the third.
Investor · Bellefonte, PA · Member since 2008 · 1k+ posts · 88 votes
18y
In PA you would only be buying the first holder position. You would then have to work with the other holders to get the property free and clear. The only exception is if the auction was a "Judicial sale" then the deed is free and clear.