Title: What Happens if There Is Another Lien on a Foreclosure Property? | Home Guides | SF Gate
Headings: What Happens if There Is Another Lien on a Foreclosure Property?
What Happens if There Is Another Lien on a Foreclosure Property?
How Foreclosure Works
Private Liens
Get the Best Mortgage Rate for You
Government Liens
Deed-in-Lieu of Foreclosure Transactions
Deficiency Judgments

Content: That being said, a foreclosure is not a panacea and, contrary to popular opinion, a property with liens against it may very well come out of a foreclosure with remaining debts. How Foreclosure Works
A lien holder files a foreclosure to get control of the house as compensation for the unpaid loan. After a period of time, the property proceeds to a sheriff's or trustee's sale. At the sale, the property is auctioned off to the highest bidder. In certain cases, the property and money sit in limbo for a period of time while the homeowner has an opportunity to redeem the property by making back payments. If the homeowner can't make the payments, the lender who initiated the foreclosure gets his money, and the new buyer gets the property. Any money leftover goes to other lien holders or to the previous owner. Private Liens
When a lien holder forecloses, it immediately trumps any private liens that got placed on the property. In other words, when a first mortgage goes through a foreclosure property, it clears out any second and third mortgages. While lien holders for the second and third mortgages might have the right to get their money back, they can't attach anything against the property after the foreclosure sale.