What options a junior lender has when property got foreclosed?

[Tek Chai]

After listening to a BiggerPocket Podcast #---, I've decided to do business with this Seattle's real estate investor/podcast guest, as a 2nd position private lender. He suggested if I'd want to consider as a JV partnership but told him that I'm not comfortable with the terms. Incidentally, there are a few other JV partners who are all looking for him, according to one investor, but he left the Evergreen state since early 2017.

Now, I'm hit hard with the reality that my 60K loan is at the mercy of the 1st position lender. On hindsight, I should have listened to my inner voice that if he could easily blew away his relative's money in the past, I should not have invested with him in the first place.

The 1st position lender have already initiate the foreclosure process. Auction sale will be at the Seattle's court house steps on 9/8/2017.

If you are in my situation, would you . . .

1. Payoff the 1st position lender 485K and foreclose the property yourself?

2. Go bid on foreclosure sale, win the bid and sell the property?

3. Do nothing and hope for the best if you can get all if not some
   your 60K back

I appreciate your comments and other solutions.

[Roman M.]

Check If there is equity left in the property to cover 1st and 2nd.

If there is equity:

You need to contact first lender and see what you need to do to bring payments current and preserve your junior position and cancel foreclosure. They should cooperate.

After you bring payments current and 1st foreclosure gets cancelled, Find a foreclosure attorney or foreclosure company in that county/state and see what you need to file a foreclosure.

File a foreclosure and now you are first one in line to go to auction. 

Once you file and you can stop paying first mortgage and they will eventually start foreclosure.

You will get to action block first and hopefully get someone to buy the property at the auction.

If they don't  bid then you get the title. You have several options:

1. Try to bring payments current again while selling the house.

2. Try to refi and keep the property.

3. Try to see if first will take less then what is owed, etc