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Lien position and foreclosure

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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Posted by Jeffrey Dolfinger on 01/26/2008 10:14 PM

Comments (11)

247reorealtycom, dolfingercom, foreclosure, reo, shortsalesnewyorkcom, hyde park ny, bankruptcy

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11 Comments on Lien position and foreclosure

JAN

2008

This is information that some who are rushing to buy foreclosure should be aware of. As experts a part of our service is well spent educating the marketplace.

Jeff - Very informative, as always! Thanks for posting this info for us on AR!

Jeff, that scenario works only in states that allow a JR Lienholder to instigate foreclosure. The majority of states are Sr. Lienholder states that allow only the Sr Lienholder to instigate foreclosure. In other words these states will not allow a 2nd or 3rd lien holder to move forward until they have bought out the 1st Lienholder prior to statrting foreclosure.

It sure can be a mess! Buyers need to really know what they are doing before they walk into a mess!

JAN

2008

Buyer beware. Thaks for the info

JAN

2008

Jeff.. I have seen more seconds jumping the gun and filing first....I guess they are getting a bit pissed at just being written off...good info!

Very good info. It is good to know to pass on to clients.

APR

2008

Does Bankruptcy (chapter 7) extinguishes Real estate Mortgage Liens on the property title?

Does anyone here have info about the junior liens filing first in CA?

JAN

I'm in the same position. We are not and never have been a single day beind on our home mortgage, but we are months behind on our business bank loans that have 2nd and 3rd leins against the house. Now those jr. loans are screaming foreclosure. I don't how that is possible if we owe the 2nd loans like 100k and our mortgage is for 200k. It doesn't seem like it is to their advantage to foreclose on our home if they have to pay the 1st lein holder.

There is ccases in AZ where if anybody above the 1st forecloses the HOA must be paid.

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