If a servicing company bought a foreclosure property and then sold it at an auction, would the title need to be cleared first, paying off both the first and second mortgage? If not, why not, if so, how can I be sure? I had a second mortgage on a property that sold without paying me off!
The second was a "free standing" loan, however it was considered a second mortgage and was listed on the county records as part of the original sale before going into foreclosure, does this mean that I could go after the original buyers of my home, because it was listed as free standing? Thanks!
Snidely_Shanksplat said:
Feb 01, 09 at 4:38 amThat’s the problem with being in 2nd position. If not enough was realized from the sale to satisfy the first mortgage in full, any holder in the 2nd position is left out in the cold. That’s why the rate on a 2nd mortgage tends to be higher than a first — there’s greater risk for the lender in the 2nd position.
Consider this scenario:
First Mortgage: $80,000
Second Mortgage: $20,000
If the home sells at foreclosure for $75,000, the first lender gets the entire $75,000 and the second gets nothing. If it sold for $90,000 the first mortgage would be settled in full and the 2nd would receive $10,000.
greeneyedblond31558 said:
Feb 03, 09 at 5:19 amRevised Answer.
Did you have a recorded Deed of Trust or Mortgage recorded in Public Record? (You said this was from the purchase? Please confirm it recorded in 2nd lien position?)
How old was it? Were payments ever made on it?
Where you notified of the Foreclosure? What state are you in?
When the property was sold any proceeds remaining after the paying of the first are due to you if you had a valid lien. Did you receive any funds? If not was there any equity in the property?
You could still likely go after them but one would assume they had no money if they were just foreclosed on?
Ed_Atun said:
Feb 05, 09 at 9:09 pmA 2nd lien holder must always be the first to foreclose. Even if only by one day. So you can protect your interest in the property. Once the 1st lender forecloses, you are wiped out.
In some states, you can go after the debtor. But only if the loan was not a "purchase money" mortgage. That would be if you loaned them money after they already owned the house, not at the time they bought it.