Buying a second at auction, reinstating first? - Posted by Handy

Posted by Rick, the Probate Guy on June 22, 2009 at 16:09:35:

While I’m tempted to stay quiet about this strategy, I don’t think that either one of us has much to worry about.

Buying a second at auction, reinstating first? - Posted by Handy

Posted by Handy on June 19, 2009 at 12:23:50:

If I buy a second at auction, is the bank holding the first required to let me catch up and reinstate the first? Both mortgages are held by the same bank, but they’re foreclosing the second first; the second was recorded first, but it’s subordinated to the larger first. I read several times this is possible, but how do I know for sure? Any links, sites, etc. that you can share will be helpful.

Recording order establishes 1st & 2d - Posted by John Merchant

Posted by John Merchant on June 20, 2009 at 12:41:15:

Appears to me the bank is foreclosing on their 1st if it was the 1st to be recorded…it might even say it was a 2d but, again, the recording order is what makes it a 1st or 2d.

You’d need to order a title exam by a title co. to know for sure, but if you already know the smae bank has both the 1st and 2d, I’m thinking that’s all you need to know.

I’d contact the bank right now to see if you could work out something with them to let you buy their interest in the RE.

Recording order establishes 1st & 2d unless… - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on June 21, 2009 at 20:54:33:

Lenders who intend to record concurrent security instruments often have language in the recorded document(s) which makes a provision for subordination in such cases.

I’ll occassionally have a property where I decide that I want to sell the first TD and keep a 2nd TD, the riskier part, in my own portfolio. Since I have no control over the title company’s courier who makes the run to record my docs or the document examiner at the recorder’s office (and not being one to leave the the recording instrument number order to chance) I have language in the piggyback 2nd that states it’s junior to the concurrent 1st. However, if I were foreclosing, the prospective bidder would be wise to actually read my docs prior to sale.

This brings up an interesting point: only an extremely few investors have incorporated the practise of reading recorded documents, whether they intend to bid at foreclosure sale or just buy from seller. I know that it’s an extra, sometimes tedious step, but I’ve made some of my best profitable deals because I took the time to read that a certain TD cross collateralized several properties, or had some other anomaly.

Recording order establishes 1st & 2d unless… - Posted by Natalie-VA

Posted by Natalie-VA on June 22, 2009 at 12:14:46:

Hi Rick,

I know what you mean. I don’t often read the actual documents prior to the FC auction, but sometimes my gut tells me to investigate further. I once bought one where no other investors showed up, because they thought it was a 2nd DOT. I researched and saw the it was recorded around a year prior to the assumed first with no subordination agreement. I think that was my most profitable deal.