Posted by Bill H on May 24, 2005 at 18:23:37:
You asked: Wouldn’t the 2nd have to pay off the first if he/she forecloses? The answer is yes, if the first forces the deal after the 2nd forecloses then the new owner (whomever bought the second at the sale) has the responsibility of correcting, to the satisfaction of the first lienholder, the first.
In other words if the first wants to be paid off, the new owner has to arrange financing to do so. If the first is happy just getting payments on time…all well and good. That still happens even with the due on sale clause…remember…lenders are in the $$$$ business…NOT…the real estate business.
Can the 2nd afford to pay off the first? That is a question only the new owner can answer…however read the above and note that the new owner must be able to do something…and sometimes very fast.