Buying a 2nd Mortgage foreclosure

Posted by WashingtonStateInvestor on February 27, 2008 at 18:00:26:

There is a home going for auction in Wash. St that I am interested in. The 2nd position lender is the one who filed for foreclosure. 125k is owed on the first mortgage and 140k on the 2nd (a line of credit actually) If I purchase the home for the minimum bid of 140k, do those proceeds to directly to the 1st mortgage? And then the 2nd gets wiped out? (Why would they file for foreclosure then unless they are planning on bidding at the auction themselves to raise the price above the minumum to get some of their $$$ back...)

Are my assertions correct? Regardless of whether it is the 1st or the 2nd who files for foreclosure, the funds paid at auction will be dispersed by the trustee to the first mortgage first and any other liens are wiped out?

Correct? (I have purchased a number of homes at auction but they have all been 1st mortgage initiated foreclosures...)

Thanks for any insight!

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