Bid On House Subject to 1st mortgage... Advice Needed (Ohio)

[John Perry]

I bid on what turned out to be a a 2nd mortgage in Ohio. The house is worth around $300k. I paid 258K at auction. Looking through the court records I can see that the 2nd mortgage was awarded ~100k. There are around ~145k in excess funds which I assume go to the owner not me or the existing debt. How bad is my damage. I don't have much cash left to pay the first mortgage, in fact I don't even know how much debt there is on the first.. 

IF anyone has any advice to minimize damage, or a contact to call please let me know. My primary concern is figuring out how much debt is left on the first. 

[Chris Seveney]

@Michael P. Happens all the time.

We invest in notes and it is not uncommon for a distressed borrower to pay their first mortgage and not their second

In those instances the second position lien holder will foreclose. The first is not paid off in this instance (typically but depends on state).

So let’s say they owe $500k on the first and $100k on the second

The second will foreclose and bid $100k, whoever wins still owes $500k on the house

To the first lender

This is what may have happened in this case and they thought the first was foreclosing so it got bid up.