Does a foreclosure sale wipe out additional mortgages on a property?

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Does a foreclosure sale wipe out additional mortgages on a property?

At a county foreclosure sale initiated by the first mortgage holder with a minor mortgage holder being duly served in the foreclosure proceeding, does the title transfer free and clear? Wiping out all second and/or minor mortgages or liens?

Asked on December 12, 2011 under Real Estate Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

No, a foreclosure initiated by a first lienholder (like a first mortgagee) does not wipe out lower-priority liens (e.g. second mortgages, HELOCs, judgment liens, etc.). Those security interests will remain on the home unless and only to the extent they have been satisfied, such as by the proceeds of the sale (the first lien holder is paid first; if there's anything left after satisfying its loan, the balance is paid towards other lines). Otherwise, second, etc. mortgages would be almost worthless and would offer little protection to the lenders or creditors.


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