Foreclosures MD Junior Liens
I have a question regarding forclosure sales in MD. I want to understand what happens when you buy a junion lien at foreclosure subject to other senior liens. As an example, I went to an auction where a 3rd lien foreclosed (HOA). The amount owed to the HOA was about $2000.
There was a 1st lien due for $127k and a 2nd lien due for $50k (total $177k). The winning bid for the 3rd lien was $32k subject to the 1st and 2nd liens. Does that mean the bidder needs to come up with the $32k for the 3rd lien AND an ADDITIONAL $177k for the 1st and 2nd liens (for a total of $209k)?
OR, does the excess $30k over the amount owed to the HOA get applied toward the 1st lien? In this case the bidder would need to come up with only an additional $149k, for a total owed of $179k ($127k + $50k+ $2k - $32k).
Basically, does any excess bid on a junior lien above what is owed that junior lien get used toward paying off any senior lien?
Thanks
Paul
Wait. The third lien was $2K and sold for $32K?? Unless the property is worth a TON, sounds like the high bidder might be in for a rude awakening. In NC, the first and second liens are not affected by the HOA foreclosure.
Check your state law as far as what happens with the excess. In NC, the law ("Disposition of proceeds of sale; payment of surplus to clerk" GS. 45 21.31) states the payout order.
I see people occasionally buying HOA liens because they want to be on the title in case the first position lien ends up in foreclosure *and* and they believe the sale will be in excess of the lien. Because they have legal title, they are entitled to any remaining surplus after the application of the proceeds of the sale.
Hi
I don’t have so much idea regarding this subject. Just I suggest you to take steps accordingly.
In Florida, the surplus funds from the HOA referenced above would go to the defendent being foreclosed out....if there were no other subordinate liens or encumbrances also foreclosed out.
Under present Florida law, if the surplus was not claimed by other subordinate claimants within 60 days of the auction sale.... the owner at the time the LP was filed can claim the funds.
The superior encumbrances, 1st and 2nd mortgages, would have no claim on the funds....they were not party to the lawsuit.
I have helped homeowners recover surplus funds in exactly this situation...in Florida.
[addsig]
Banks usually list their properties with the same realtors over and over. If you contact the realtor, they can likely give you the contact info or contact the bank for you and give you a referral.
Hi
You are not clear with your thoughts, will you give more information. So I can help you out in this matter.
How much clearer do you want me to get? The others that offered advice understood my question.
not sure what state your looking in but google these companies out, they handle the clean out ,preservation.etc for alot of banks
Safeguard Properties
First Amercian Field Services
A2Z Field Services
Premier Field Services