Re: Sheriff Sale with 2nd foreclosing - Posted by John Corey
Posted by John Corey on May 15, 2006 at 03:41:16:
The sale is to address the position of the 2nd lien holder. No reference and no comments are made as to the state of the first, what could be done if there are back payments, etc.
The lender in 1st can take any action allowed to protect their loan if the loan is in default. If someone was to buy the 2nd out of their position at a SS it is likely this alone will cause the 1st to go into default. Many time the 1st is already in default as a borrower who can not pay the 2nd many not be paying on the 1st.
The GSGM act that set up DOS was silent on the rights of the 2nd lien holder taking over the 1st to defend their interest in the property. Some lenders in 1st will expect to be paid off. Many lenders will not exercise the DOS initially as they do not want to get into the same position if things were reversed. At all times be prepared to pay off the 1st just in case.
Get a lawyer to offer a local opinion as to what normally happens in your state.