Foreclosure University Forum


Jr. Lienholder Forecloses w/out Sr. Knowing

by foreclosureuniversity ⌂ @, Wednesday, February 25, 2009, 16:14 (3764 days ago) @ alisad

� � It is very possible for the 2nd lien to foreclose on a property. The
� only
� � thing is that they will be responsible for the full payoff of the
� senior
� � lien. They probably evaluated the property and felt like the property
� was
� � worth a lot more than what is owed to the senior lien. Taxes liens
� have
� � been paid off on many properties I dealt with by Mortgagees simply
� because
� � Taxes are senior to mortgage liens.
� �
� � Sincerely
� � John Lee
� Thank you for the reply. I do have a couple of questions if you know the
� law in California. If the jr. lienholder is the only bidder at the
� auction, don't they have to at least bid what is owed to them. The Jr.
� bid only $20k and they are owed 85k and they have had NO contact with the
� Sr. nor any attempt to payoff the Sr. or come to an agreement with them as
� to a payoff amount. They have now served me with eviction papers and in
� the court docs filed they state that they are the property owners. They
� do not even mention in docs that they
� are the jr. and there is a sr. lienholder. Any help will be appreciated

While this is true, the 2nd lien holder can foreclose, they can also reinstate the 1st and take over the property subject to, that way they don't have to pay off the first. They have to continue to make payments to the first to keep it current or "pay off" the loan. Investors actually do this all the time so they don't have to come up with a ton of money. They are taking the risk by foreclosing in hopes someone will bid because they will get paid the full amount. If no one bids, then they continue to make payments to the first. And sometimes, like in your case, the first may not even know it's going to foreclosure. Then they will try to sell the property.

Good Luck

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