Foreclosure - Second Mortgage

[Joseph Glazer]

Just trying to make sure I understand the mechanics of a foreclosure auction when the holder of the 2nd mortgage is the one foreclosing. Assume the following facts - 1st mortgage with $150K principal remaining and a 2nd mortgage with $50K principal remaining. The holder of the 2nd mortgage forecloses and the property goes to sherriff sale. Assume that the holder of the second mortgage has an upset price of $60K, so that is the maximum he will bid at auction. If I were to bid $61K and win the auction, my understanding is that I own the property subject to the 1st mortgage. I can then payoff the 1st mortage and I will own the property free and clear (assuming their are no other liens or debts that are attached to the property). Am i correct or am I missing something? Thanks for any insight.