Trustee Sale - Posted by John Chan (S. Cal)

Posted by Randy (SD) on January 10, 2006 at 14:34:15:

When a property sells at a foreclosure auction the underlying liens are paid off in the order as they exist on the chain of title, first is paid first, second is paid second etc. if the first lienholder is the foreclosing lender and the second lienholder does not appear, the second will be wiped out. If the second lienholder does appear he must bid up to the amount of his second lien, which means he’s responsible to pay off the first lien, if you’re a third lienholder the same applies, you must pay off the first and the second in order to protect your third.

Yes there are investors who buy second notes on properties going into trustee sales, it depends on the “total package” including CLTV, seasoning, rate & Terms property location and condition. Generally they are purchased at a heavy discount. If you’re close to this property and have a relationship with the second noteholder, this might be an opportunity. I’d consider lining up a hard money loan to cover the foreclosing first and 10 cents on the dollar for the second, show up at the auction or contact the first lienholder and work a short sale.

Trustee Sale - Posted by John Chan (S. Cal)

Posted by John Chan (S. Cal) on January 10, 2006 at 05:50:04:

Dear anybody,

I need some Advice on California trustee sale? Can anybody tell me what happens when nobody bids on an auction property? Does it revert to the person/company that filed for foreclosure preceedings. What about second, third note holders, and the thereafter? do they get wiped out?

Is this when properties become bank REO? If so, then the banks are getting the deal and making the buko bucks while the other note holders are not making any? Does not sound fair

  1. What kinds of equity do you buyers(if any) look for before bidding in a market like now? for southern California.

  2. Would anybody be interested to buy a note at a discount for a 2nd note on a property going into trustee sale where the comps exceed first and 2nd mortgage by 150K. I am wondering why would I sell the note but that it’s a person I know who wants out and sell discounted for that person is afraid to get burned? I told him don’t worry and keep the note and he’ll get paid back?