Investor · Miami, FL · Member since 2013 · 807 posts · 475 votes
I appreciate this line of questioning has come up before but I am still struggling to understand how to ascertain if there is clear title when there are multiple mortgages.
The property shows multiple mortgages. There is no 'assignment of mortgage' or 'satisfaction of mortgage' between them.
Firstly I don't even understand how you can take out multiple mortgages on the one property. If Bank A wants to loan Sally 100K using her condo as collateral, how can Sally ask Bank B for another 100K using the same property as collateral?
I read that the first mortgage always knock out the subsequent mortgages. So if I buy a property where the foreclosing lender was the first to give out the loan, then my purchase will be safe.
However what about if the foreclosing lender was the middle or last on the list of lenders?
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
11y
If you buy a junior lien, you've bought the property subject to all liens recorded prior to the one foreclosing. Keep in mind that loan positions can switch places with a subordination agreement, so just because it was recorded first doesn't always mean it's a first, and just because it was recorded last doesn't mean it's most junior. Subordination agreements would be recorded (and they aren't all that common), so just be sure to watch out for them.
If there are three loans recorded, and no subordination agreements, and you buy at a foreclosure sale of the middle one, you are buying it subject to the first one but the third one is wiped out.