Liens have positions on the title to property, 1st, 2nd, 3rd etc. A 2nd mortgage lien holder can foreclose on a property but their foreclosure action is subject to the lien of the 1st lienholder. So if someone where to buy the home at the auction or from the lender as an REO they would still have to pay off the 1st mortgage lienholder.
Conversely if a 2nd lienholder where to foreclose on a property with 3 or more mortgage liens then every lien, mortgage or not, with the exception of taxes recorded of record on the property after the date of 2nd mortgage would be exstinguished by the foreclosure action of the second mortgage holder.
So when a 1st postion mortgage holder forecloses they extinguish all liens that are subsquent to them with the exception of taxes.
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