If a property is foreclosed on by the first loan. What happens to the other loans and liens against the property? Do they just get wiped out? Do they stay with the property?
In general, everything except tax liens get wipped out. If for some reason the foreclosure sale price is more than is owed on the first lien and tax liens, the extra may pay part of any 2nd’s or other liens, but that is a rare case.
Understand that subordinate notes are wiped out at the AUCTION. If you are attempting a short sale you must have the buy-in of the subordinate note holders.
Dont forget about IRS liens as well. THey dont go away unless you talk to the IRS>