In a trustee sale (the final event in a process called foreclosure) that sale wipes out all liens of record that existed prior to that. So the higherst bidder gets a property free and clear (so to speak there is a little more than that) and those home loans in your example of $140,000 owed are released from the property.
The second position note holder was not paid the full amount to release their lien. (Likely the $95,000 bid by the first position bank was their principal, interest owed and all of the related fees) Likely the second position note holder wasn't paid anything. So they have sued you. There are several strategies you can take depending on your financial position and how you owned that property. The best source for that would be a Real Estate attorney. Most consultations are free before they starts working. If you need a referal I would be happy to give you one from local source that is good.
Loan Officer/Real Estate Asset Planner
Financing Solutions for Arizona Real Estate since 1993
American Financial Lending, Inc.
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Phoenix, AZ 85050-4277
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