Foreclosure Questions

[hobbyinvestor]

1. If property is foreclosed on and the proceeds of the sale are greater than the amount owed, does the homeowner (person being foreclosed on) keep the difference?

2. When first mortgage holder forecloses, the 2nd note holder (if there is one) gets nothing, right?

3. If the first mortgage holder starts the foreclosure process and 2nd mortgage holder buys the 1st, does the 2nd take over the foreclosure proceedings that are in progress or do they need to start a new foreclosure proceeding?

Thanks!

[kawika]

What state are you in?

[DFW_REI]

1)YES
2)YES - unless 2nd note holder shows up at auctions and bids on the property – in other words buys the first note holder
3) YES

[hobbyinvestor]

I’m from Arizona. Thanks for the response.

[kawika]

@hobbyinvestor

1. If property is foreclosed on and the proceeds of the sale are greater than the amount owed, does the homeowner (person being foreclosed on) keep the difference?

Yes…if by owed you mean all liens on the property (loans, judgements, tax liens, HOA, etc.). The homeowner is last in line.

2. When first mortgage holder forecloses, the 2nd note holder (if there is one) gets nothing, right?

Not necessarily. Arizona has both mortgages and deeds of trust. In non-judicial foreclosures, where a deed of trust was used and it contained a power of sale clause, the excess sales proceeds beyond what was owed on the first will go to the 2nd, then 3rd, on down the line. Money from the sale travels downward not upward.

3. If the first mortgage holder starts the foreclosure process and 2nd mortgage holder buys the 1st, does the 2nd take over the foreclosure proceedings that are in progress or do they need to start a new foreclosure proceeding?

The 1st timeline is unaffected.

Thanks!