Question - 1st and 2nd deeds of Trust - Posted by tim

import · March 30, 2006, 5:10am

Posted by Bill H on March 31, 2006 at 20:44:26:

nt

import · March 30, 2006, 5:10am

Posted by tim on March 30, 2006 at 06:10:54:

If I buy a house at auction for default on a 1st deed of trust, does that wipe out any claims to the property from lenders who have a 2nd deed of trust on the same property?

The property in question is being sold due to default on a first mortgage from 1995 in the amount ot $60,000. There was a line of credit and 2nd deed of trust put against the property in 2003 for $71,000. The owner seems to have left town.

Thanks

import · March 30, 2006, 8:18pm

maybe or maybe NOT… - Posted by David Krulac

Posted by David Krulac on March 30, 2006 at 21:18:09:

I told this story before, but here goes again:

I bought a house that was being foreclosed. The second and third mortgage holder had similar names. One was like First National Bank and the other was First National Trust Bank. Totally unrelated institutions operating from different out of state locations. The attorney doing the foreclosure for the 1st lender blows it and only notified one of the two junior mortgages because he thought that they were the same company. The LACK of notice to the junior mortgage holder means that the unnotified mortgage holder is NOT wiped out by the foreclosure sale. Only lien holders, judgement holders, etc. actually notified are wiped out.

Be careful out there.

import · March 30, 2006, 6:28pm

Re: Question - 1st and 2nd deeds of Trust - Posted by Bill H

Posted by Bill H on March 30, 2006 at 19:28:06:

Here’s what I see happening in this case. The others are correct in that the 2nd will be wiped from the title, etc…
The IRS will have an automatic 120 day RoR…all property taxes will survive the sale…and…with very few exceptions, all others are wiped clean.

The property in question is being sold due to default on a first mortgage from 1995 in the amount ot $60,000…
Seasoned loan so there must be equity and some apppreciation…the amount due the 1st TD plus all their cost of doing the foreclosure will be the opening bid.

There was a line of credit…
If this is the same lender as the first…they will immediatley at the opening of bidding up the bid to include their HELOC…

2nd deed of trust put against the property in 2003 for $71,000…
If there is enough equity left after the above, then in order to protect themselves the 2nd will enter the bidding and raise it as high as they can to get as much of their debt back as is possible.

The owner seems to have left town…
Not unusual…lots of them do.

Good luck,
Bill H

import · March 30, 2006, 6:14am

Re: Question - 1st and 2nd deeds of Trust - Posted by dutch

Posted by dutch on March 30, 2006 at 07:14:21:

The simple answer is yes. Foreclosure does not wipe out tax liens and other government leins like weed tax, etc.

The 2nd gets wiped out or gets what’s left over after the 1st is paid off. The money trickles down, and although it’s very rare, if everyone got paid off and there was excess funds, the deadbeat himself would actually be owed money. It has happened.

Dutch
Oklahoma

import · March 31, 2006, 7:48pm

True David…No Notice…No Deal…(nt) - Posted by Bill H

Posted by Bill H on March 31, 2006 at 20:48:23:

nt

import · March 30, 2006, 7:53pm

Re: Question - 1st and 2nd deeds of Trust - Posted by tim

Posted by tim on March 30, 2006 at 20:53:36:

How do the 2nd lenders find out the 1st is in default?

import · March 30, 2006, 11:03am

Re: Question - 1st and 2nd deeds of Trust - Posted by Natalie-VA

Posted by Natalie-VA on March 30, 2006 at 12:03:29:

Dutch,

It’s not rare at all in my area for the owner to end up with excess proceeds. I would imagine that many other areas of the country that have had a lot of appreciation would see the same thing.

–Natalie

import · March 30, 2006, 8:14pm

Re: Question - 1st and 2nd deeds of Trust - Posted by Bill H

Posted by Bill H on March 30, 2006 at 21:14:07:

Tim, Before you can conduct a salee you are required by law notify ALL INTERESTED parties of the upcoming foreclosure and sale.

You cannot hide it…failure to notify is the main defense and reason for a sale being rescinded.

Good Luck,
Bill H

import · March 31, 2006, 10:22am

Re: Question - 1st and 2nd deeds of Trust - Posted by tim

Posted by tim on March 31, 2006 at 11:22:18:

I attended the auction today and it was cancelled.
Since the owner seems to have vacated the property, I’m guessing the 2nd noteholder stopped the sale.
The second is a line of credit with MBNA America.
What are the chances of me getting in touch with them and submitting an offer to buy it?