Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Foreclosures
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 9 years ago on . Most recent reply

User Stats

26
Posts
2
Votes
Allan B.
  • Investor
  • Fort Lauderdale, FL
2
Votes |
26
Posts

Two simultaneous first mortgages on a property, one is foreclosing, what happens?

Allan B.
  • Investor
  • Fort Lauderdale, FL
Posted

Consider this scenario:

1. Bob is purchasing a home, and starts applying for mortgages, and is shopping around.  Home purchase price is $500k.

2.  Two banks, namely Bank A and Bank B, offer him a first mortgage, each in the amount of $300k.

3.  Sneakily, Bob accepts both mortgages, and each bank is not aware of the other bank's mortgage.

4. Bob gets both mortgages, and uses $500k of the $600k received to purchase the home, and pockets the additional $100k.

5.  Bank A's mortgage contract date is 01/01/14, and recording date is 01/10/14.

6.  Bank B's mortgage contract date is 01/02/14, and recording date is 01/09/14 (earlier thank Bank's recording date).

What happens in this case?  Which lien gets priority?   Both banks did not receive adequate notice of each other's encumbrances.

Can Bank B foreclose on owner, claiming first priority, due to an earlier recording date (but later contract date)?

Most Popular Reply

User Stats

604
Posts
222
Votes
Jim Viens
  • Rental Property Investor
  • Kansas City, KS
222
Votes |
604
Posts
Jim Viens
  • Rental Property Investor
  • Kansas City, KS
Replied

Quick answer is this: Bank B's mortgage takes precedence. It goes by recorded date. Oh...and Bob is likely going to jail for mortgage fraud.

Loading replies...