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2nd Home Equity line of credit being foreclosed, but not the mortgage 1st lien ~ what happens with the 1st lien after the auction sale price for just the 2nd?
(CO)

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Nigel Posted: 6 Jun 2012 01:53 PM

The 2nd Home Equity line of credit is being foreclosed, but not the mortgage lender/ 1st lien ~ what happens with the 1st lien after the auction sale price and just the 2nd lien is paid off?

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jcone replied on 7 Jun 2012 03:17 PM
If the senior loan is remaining intact after the foreclosure sale that tells me that the holder of the second is planning to continue making payments to the first lien holder and thus the first lien gets paid and the second lien holder gets the property.
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KDH replied on 12 Jul 2012 08:57 AM

The 1st lien is not remaining intact per say.  The 1st lien will be paid first before the 2nd lien holder receives any proceeds.  The 2nd lien holder believes that the home is worth enough to cover both liens, and then some.  They must feel assured of this as they are essentially risking the amount of the 1st lien based on that value estimate.

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cddchuck replied on 17 Jul 2012 12:21 AM

Each lien is against the property. The first lien stays and stays in your name. That makes the title clouded. The purchaser at auction will still have to pay off that 1st lien to get the title clear. If it hasn't been to auction yet I may be able to assist. Email me at cddchuck@yahoo.com

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cddchuck replied on 17 Jul 2012 12:41 AM

The reply by KDH is not exactly true. If the 2nd lien holder went to an auction and sold his lien -he got his money. The purchaser now holds title but the 1st lien still exists in the name of the original borrower even though that person no longer holds title to the property. If that 1st lien is not paid the 1st lien holder can then foreclose.

What that means is that the purchaser of the second lien still must pay the first (It of course may not have been purchased at auction and then it would be an REO in the name of the 2nd lien holder.) Still the 1st lien is in the name of the original purchaser and if payments are not made by someone that 1st lienholder can foreclose. - Which again ZINGs the credit of the original buyer - that loan is in his name even though he doesn't hold title to the property.

I buy houses fast. If the auction has not happened yet contact me cddchuck@yahoo.com

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