See this Blog for a discussion of the legalities. https://www.biggerpockets.com/member-blogs/12388-abandoned-property-adventure-on-wildsideBe aware that a non owner and non lien holder can only pay another person's property taxes in WA (to prevent the property from being foreclosed for back taxes) up until the date the County starts its Foreclosure by filing a Certificate of Delinquency. 

Neither judgment holder indicates that applicant has contacted them or made any efforts to settle judgment.2) Past land lord (2015) stated eviction was due to property damage, unpaid rent, and disturbance of neighbors.3) Less than 90 days on current job.

Check with a real estate attorney/title company to verify, but......I would assume the UCC lien holder was named and served in the foreclosure auction and was wiped out as a junior lien holder.

If so, does the principal loan holder get involved/notified?

They form a special entity (usually LLC) called the Exchange Accommodating Title Holder (EAT). 

As the 2nd lien holder, again, I'm wiped out entirely.

Normally my bank would be the lien holder on my insurance for a covered property.

‘The only instance I can think of where the passive investors don’t retain further interest in the property would be if they are note holders and not equity owners. 

Liens against the owner, assuming the lien holders were noticed, get wiped out.  

On one of my tax sale purchased, I was contacted by the primary mortgage holder a week after the sale, and they were looking for a discount on the redemption.