Posted by John Merchant on August 24, 2011 at 15:19:47:
Being in the foreclosure trustee business (I operate a Trustee Foreclosure
co) I tend to forget how little the process and ramifications are understood
by gen public.
e.g. it’s little known that a deed-in-lieu given or taken to avoid full
foreclosure does NOT eliminate whatever other liens might be extant on the
property.
So moral is if you’re the creditor you’ll likely be forced into full foreclosure
in order to eliminate all other liens (not tax liens as they have priority.
Rationale is clear enough…if those subordinate lien-holders get the legal
notice of the foreclosure and auction then they’ve been given the unfettered
right to attend and bid on the property.
And of course if the creditor and debtor “conspire” to avoid the auction
those other lien-holders have been deprived of their rights to attend and
bid on the property so this law protects them.