what happens when a house goes into foreclosure with more than one loan against it.?

April 15th, 2009 | by admin |

I have been watching foreclosure listings in the news paper,. A house one month was listed for $15000 and then next month it was listed $120000. What happens if you bid and buy a house with more than one note against it. How can you figure out how many loans are aginst a property. By the way this is in georgia.

any info on this or any other foreclosure info would be greatly appreciated. thanks

County court records are usually available online and will show the mortgages and liens against the property. In this case you described, the second mortgage was probably in default first, then the first mortgage was added. In foreclosure, the FIRST mortgage gets satisfied first, after the IRS, of course. Then the SECOND mortgage is second. Workmen's liens are after that. More often than not, the second mortgage holder does not get paid, at least not fully, and has to go after the borrower later.

BE VERY CAREFULY buying foreclosure homes when you are not experienced at this. You can easily get burned! Always have a title search and buy title insurance, and use a reputable closing company to handle the closing and filings.

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  1. 5 Responses to “what happens when a house goes into foreclosure with more than one loan against it.?”

  2. By maplewoodjoe on Apr 15, 2009 | Reply

    before buying anything, demand a recent title search of the property. This will tell you every lien against the property. If unavailable, I would invest the cost to obtain one from a title company.
    References :

  3. By MoneyMonkey on Apr 15, 2009 | Reply

    County court records are usually available online and will show the mortgages and liens against the property. In this case you described, the second mortgage was probably in default first, then the first mortgage was added. In foreclosure, the FIRST mortgage gets satisfied first, after the IRS, of course. Then the SECOND mortgage is second. Workmen's liens are after that. More often than not, the second mortgage holder does not get paid, at least not fully, and has to go after the borrower later.

    BE VERY CAREFULY buying foreclosure homes when you are not experienced at this. You can easily get burned! Always have a title search and buy title insurance, and use a reputable closing company to handle the closing and filings.
    References :

  4. By broccoli brain on Apr 15, 2009 | Reply

    The easiest way is to have a title company run an O & E (ownership and encumbrance) report for you. It will tell you how many loans and how the original loan value of each loan.
    Good Luck!
    References :

  5. By Jennifer S on Apr 15, 2009 | Reply

    Yes, you get a title search. They are free in California. What happens when the owners owe more than the house is worth is called a "short sale"

    The lender in the second position on title has to agree to release their lien for less than the owner owes them. They sometimes agree to do this because if the lender in first position forecloses on the property then they get nothing. If they don't agree to release the lien then the title company won't close the transaction.

    A word to the wise: Don't buy a home without getting a buyer's inspection. It cost a few hundred dollars and can save you thousands…you can negotiate a lower price based on the problems that are uncovered. There can be massively expensive problems hidden in foreclosure homes.
    References :

  6. By Susan on Apr 17, 2009 | Reply

    I think in that case, I would save myself the headache and purchase a REO.

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