Re: Foreclosure on 1st and 2nd mortgages

Posted by steele in minnesota on August 14, 2006 at 20:58:56: In Reply to: Foreclosure on 1st and 2nd mortgages posted by Charles on August 14, 2006 at 18:25:23: : I am looking at bidding on a foreclosure at auction. The owner purchased the home for $350K, and put $70K down. He then pulled out all equity for a second mortgage. He has not made a payment on either. The begginging bid is for the amount of $280K, which is the amount he owes on the first. I understand that if it is sold at auction that the winning bidder is not liable for the second mortgage. If that is the case, do I need to be worried about who the lender is at the auction? Both the first and the second mortgage are with Decision One Mortgage, but the Lender is now posted as Countrywide. I guess what I am asking is if I get this property at auction, will I some how inherit the debt for the second mortgage?

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My understanding is "no". The second mortgage will have the same chance as you to bid at the auction. If they don't, they lose. The only time a mortage is "inherited" by a buyer is when it is not the first mortgage but rather a secondary lien. The first remains in place in that case. That is why it is so important to know just who is doing the foreclosing.

Steele
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