Second Mortage Foreclosure

[tazbeer]

What is the name of your state? Minnesota. We purchased a mortgage at a Sheriff's Sale yesterday. At the Sheriff's Sale, they never stated that it was a Second Mortgage. Also when we checked for Judgement, the courthouse never said that there was a 1st and 2nd on the property either. We thought it was a first mortgage because we did our research. We know there are back taxes of $2800 and a Judgement for $3500. We filed the paper work right away that was given to us by the Sheriff's Office and the bank. What happens to the First Mortgage and what is our legal options now. What do we do next to get our money back or the house? There is a first if 225,000 and 35,000 on second. Once againi we thought the 35,000 was the total mortgage. What are legal options? Do we contacat the owners? We are lost and scared at this point about loosing the $35,000. Please let us know ASAP. Thank you for your time and information. This will clean most of our retirement fund if we lose it. We were buying this to build our retirement. We both checked the information and thought we had it all right, But someone gave us the wrong information.

[LindaP777]

Well, I am confused, but I'll try to help. Here, we don't buy mortgages, we buy property. I have experience with sheriff sales here in Ohio, but none in MN. The information I'm giving you is what happens in Ohio, but it may guide you to ask the right people the right questions. And if the proceedings have been done correctly, everything is wiped out at the sheriff's sale (all mortages, liens, etc., except IRS liens - they have a right of redemption for 90 (?) days). If there is a defect in the sheriff sale proceedings, we have 30 days to vacate the sale. Bidding starts at 2/3 the appraised value. And the mortgage holder (at least the guy at the bottom of the pile) must be there to bid to protect his interest, otherwise, he could get nothing from the sale (lose out).
Let's say a house is worth $100,000. It has a first mortgage balance of $75,000 and a second mortgage balance of $10,000 (so that's $85,000 total). Bidding would start at $66,000 (2/3 the appraised value). If the house sold for $75,000, that would only be enough to cover the first mortgage, so the second mortgage holder would get nothing from the sale. So, in order for the second mortgage holder to get his money, the bidding would have to go to at least $85,000 (plus there are expenses like property taxes in arrears, attorney fees, late fees, etc. - the bank would know what number they have to reach to cover everything). So that's why you see the second mortgage holder bidding at the sale. I have bought houses for minimum bid. The bank was not there, but they would be satisfied with what they got if the house sold for minimum bid, so they didn't bother to come.

What did you end up paying? Was it enough to cover both the balance on the 1st & 2nd mortgages? Order a title search pronto and find out if there was a defect in the proceedings if you can vacate the sale. If you getting a mortgage yourself, be sure and get the same title company the bank uses for the title search, but get them to do it NOW. Time is of the essence, here.