property is worth 60,000.first of 14,000 and own the second for 5,0000. can i foreclose and pay the first and become sole owner?

Asked by Mike, Long Beach, CA Sun Apr 8, 2012

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David Farrell’s answer
David Farrell, , Long Beach, CA
Thu Apr 12, 2012
I generally agree with Mr. Neves's response. If the junior lien holder (you) forecloses, you will either have to buy out the 1st mortgagee upon its credit bid for the amount it is owed, or take the property subject to the 1st mortgage. Foreclosure of junior liens wipes out all junior liens behind it, but not senior liens ahead of it. Also, if FMV is $60K there will probably be others bidding at the sale which needless to say will drive up the price.
0 votes
Celso Neves, Mortgage Broker Or Lender, Downey, CA
Tue Apr 10, 2012
First lien lenders can credit bid their debt on the assets subject to their first lien. Second lien or junior lenders can also credit bid their debt, as long as they pay in cash the full amount of the claims of lenders in front of them first (including interest and fees under applicable loan documents).

The Nuts and Bolts of Credit Bidding: A Primer for Traditional Lenders and Distressed Debt Investors

Article By:
Boris I. Mankovetskiy
Sills Cummis & Gross P.C.
0 votes
Michael Magaw, Agent, Torrance, CA
Mon Apr 9, 2012
Is this property in California? Worth $60k, and you are a lien holder in second position? If the borrower is not paying you, then you can have the Trustee file the NOD and later NTS.
Most borrowers will find a way to get caught up or refinance if the home is worth 3 times the mortgage.
If they do not get caught up with the payments within the rules of the NOD and NTS, then you can foreclose. You will need to settle with any and all senior liens. First TD, property taxes, IRS, mechanics liens, etc. So do your reserach and know what you are doing.
Finally, before making any decisions of this nature, contact a real estate attorney to confirm that you have all the necessary information.
0 votes
Brent James, , Long Beach, CA
Sun Apr 8, 2012
if you are lien holder second in line and the first is foreclosing you can buy the note and foreclose yourself if they are not paying you either.
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