Foreclosure Auction W/inferior Lien
I'm a newbee to foreclosures and have a very basiac question.... I've researched state statutes but can't see where this is explicitly addressed. Any help would be greatly appreciated. SITUATION: 1st mortgage holder is forcing judicial foreclosure sale (auction) and has given 2nd mortgage holder notice (Lis Pendens). QUESTION: If it goes to auction and the accepted bid amount exceeds the judgment for 1st mortgage but is not enough to cover the 2nd mortgage, then does the 2nd mortgage holder lose its claim to the property? i.e. can I later sell with clear title? Or can I in any way be held accountable for a deficiency judgment? Thanks. :P
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Are you the 2nd holder?
I am not a lien holder.....Only a potential bidder. Sorry for not making that clear.
Thanks for your help.
If you're bidding on the first and you win at auction, the 2nd (and any other junior encumbrances) will vanish. Whether there is anything left over to go to the 2nd or not is not your concern. Depending on your State the junior lien holders may sue for deficiency against the original owner.
Be aware though that property tax liens and Homeowner dues are not typically eliminated by the foreclosure process.