Posted by Mike Daly on March 09, 2002 at 22:34:13:
First of all, if the 1st foreclosed you’d have the right to bring the 1st current to protect your interest, and any monies you paid to bring it current would be added to the amount owed on your 2nd.
If it goes to a sheriff’s sale, the lien holders are paid according to their priorty. Usually what happens is the 1st mortgage holder will bid the amount they’re owed and no one else bids. Sometimes though, the bidding will go beyond this, and any amount bid over the amount owed on the 1st would go to you. One strategy would be to actually advertise that the property is being sold at the sheriff’s sale in the hope of driving up the bidding.
If I was holding a 2nd mort. and the 1st started forclosure procedings and the 1st ended up with the property would I get nothing? Would I have to also have to be a plantiff on the suit to get paid or would that even help?
(THIS IS JUST AN EXAMPLE TO TRY AND UNDERSTAND, I’M INVESTIGATING POSSIBLY BUYING PAPER IN THE NEAR FUTURE)
THANKS
I think the time to jump in and protect your second position interest is before the first lienholder actually forecloses. When the papers are served, they are also served to you, giving you time to do something. If they go BK before the foreclosure, then you have to come in as a secured creditor.