2nd lien foreclosure

[Jeffrey Farkas]

I see some foreclosures where the bidders must buy subject to the first mortgage. The auction price seems to assume that the proceeds will be applied to repay the first mortgage and the second mortgage. For example, the property is valued at $300,00. The property is being sold subject to $175,000 first mortgage. Second mortgage is $50,000. Property sells for $220,000. How does the buyer ensure that the proceeds are used to pay the first mortgage?