Florida foreclosure home purchased

[Cheryl Olson]

We purchased a foreclosure home. My husband is now worried we bought the second mortgage foreclosure. It clearly states on the “ Final judgement of foreclosure” that this lien is superior to all other claims. But on title work we pulled it shows a mortgage and another one directly under it, both mortgages were filed on same day. Nothing indicates that one is a second or a first. And they both were mortgages under the same exact bank. Can anyone help me with this dilemma. Or are we worried for nothing? Thanks!

[Jon Holdman]

@Lucky B.

I don't think banks commonly foreclose if the property value is insufficient to cover senior encumberances and leave something for them.   It wouldn't be worth the expense of the foreclosure process.  But its entirely possible for there to be enough equity in a property for someone to buy it at a second mortgage foreclosure and still get a good deal.  Or, for the second position lender to get it back if nobody bids and then sell it and get some or all of what they're owed or possibly even turn a profit.  Without more information its hard to say exactly the situation here.

I do get the feeling that HOAs do sometimes foreclose hoping someone will pay them off.

I've also heard of folks deliberately buying at an HOA or second mortgage foreclosure even knowing there's no equity and they're buying "nothing." At the least, they will have possession and legal ownership of the property for some period of time. They could live in the property or rent it out until the senior lien holder gets around to foreclosing.

Also, lets be clear on terminology. At a foreclosure auction, the winner is not "buying the lien". They're buying the property. The lien is eliminated by the foreclosure and the lienholder is paid from the proceeds of the auction. It is entirely possible to buy a lien. In this case, apparently a "non performing note" or NPN. Mortgages are bought and sold every day. Investors might buy a NPN with the intention of foreclosing or with the intention of doing a modification and getting the note back to performing status.