Texas Foreclosure Sale and 2nd Lien

[Jamie H.]

Hi,

I'm trying to get a good grip on buying foreclosures from the courthouse steps in Texas when the property has a 2nd lien.  For example, the sale mentions the first lien, the primary, from the main bank foreclosing.  It does not mention the second subordinate lien at all.  

Assuming it is a second mortgage lien towards the property for a much smaller amount and is secondary position, what happens after the sale and how do you get the 2nd lien extinguished?  What are the ins and outs and things you should know?

Thanks.

[Steve Babiak]

In this next thread, you will find links to contributions from @Rich Weese on his TX foreclosure auction buying.

http://www.biggerpockets.com/forums/41/topics/6897...

In general, if the junior liens are given proper notice of the foreclosure that the senior lien is auctioning, then the junior lien is extinguished; the lien being extinguished simply means the the debt can no longer be attached to the real estate - in no way does that eliminate the borrower's obligation to repay the remaining debt owed to the junior lender.  The winning bidder at the foreclosure auction on the senior lien will not have the burden of paying off the junior lien holder (assuming the junior lien holder was given proper notice). This can vary by location of course, but this generally is the way it should work in most places.