Legal question re: foreclosure auctions - Posted by Donna

Posted by John Merchant on July 02, 2003 at 19:29:03:

Don’t know for sure what a “line of credit” is, insofar as knowing its creating a recorded lien. Obviously depends on state law.

Since you say that the mtg. co. is foreclosing on it, it is apparently a mortgage-securing lien.

And the test of whether its foreclosure would wipe out the other mortgage, I’d suppose, would be whether it was recorded before or after the mortgage. So look at the time stamp on both to see when they were recorded.

Just as in the birth of twins, they can’t be recorded (or born) simultaneously & one is a little older or younger than the other,if only by seconds, and the one that is recorded or “born” first (mortgages, that is) is superior to the other & is not extinguished by later recorded liens.

If it is the first recorded mortgage, even if by mere seconds, that’s being foreclosed, it’s effectively extinguishing the other one…not the debt, but its lien. Since you wouldn’t have assumed that debt which was secured by the now defunct mortgage, you wouldn’t have to worry about it. Or pay it.

Legal question re: foreclosure auctions - Posted by Donna

Posted by Donna on July 01, 2003 at 21:16:43:

I was at the County Court house (in Michigan) today asking the Sheriff questions about the foreclosure auctions. There were four properties sold, I was the only one who showed up. She said that if I bid $1.00 above the banks min. bid, then paid her the money, waited for the redemption period to be up, I get the property. However, she said that I would be responsible for any other mortgages or leins on the property and those must be paid by me in order to get the property, is that legal? I didn’t think it worked that way, or am I just naive? Thank you in advance for your help.

Deputy wrong re other liens - Posted by John Merchant

Posted by John Merchant on July 01, 2003 at 22:09:42:

If the other liens are secondary to the one being foreclosed, I’d be quite sure they’re going to be wiped out at the foreclosure of the 1st…if they’re ahead of the foreclosing lien, then you would have to deal with them as soon as you gained right to RE @ the auction.

Liens have priority in the order they’re recorded, so the oldest one is the 1st, next is the 2d, etc…and other tack-on liens such as IRS, child support, etc., are behind all the mortgage loan liens normally.

If you can see ahead of auction just which props are going to be auctioned, then you could probably get title & lien info from title company, so as to know what you’re bidding on.

Good luck.

That brings up another question - Posted by Donna

Posted by Donna on July 02, 2003 at 12:51:35:

Here’s another question then: There is a Mortgage for 55,500 recorded the same day as a line of credit for 10,000. Three years later the mortgage company sold the 55,500 mortgage but kept the line of credit. Now the owner has defaulted on the line of credit and the mortgage company is foreclosing on 10,000. Could I bid on that and not be responsible for the 55,500 mortgage?