Question on Tax Lien investing

[Chris Masons]

I understand how the process works but my question is this:

If a person wins a bid for a tax lien and owner doesn't pay the lien in the specified time you can start the foreclosure process. Now assuming there is a Mortgage on the property do you end up taking the house subject to what is owed on the house?

Wouldn't it be advantageous for banks to send out their people to bid and win the tax lien auctions to protect their asset?

as always thx in advancae,
Chris

[Kyle Meyers]

The bank still can try to collect on their note with the previous owner, but they do not have the mortgage to secure the note.

I believe the reason the tax lien trumps the mortgage is because the states make the laws and the states want to sell the tax liens to get their cash flow. The banks are still informed that they are going to potentially lose their interest in the property and they can pay off the lien to keep it, but the state/county/city needs to be able to collect the property taxes and this is the best way for them to do that.

It is in the best interest of the public for tax liens to be superior to mortgage liens.