Can second mortgage holder claim excess sale proceeds and mortgage foreclosure sale?


Jerry: Here’s my dilemma. I hold a second mortgage. The first mortgage holder has obtained a final judgment of foreclosure. It has not yet been set for date and time of the electric sale, it has not yet been set.

Attorney Tom Olsen: Got it. 

Jerry: His claim is approximately 350,000. I am holding a $60,000 second mortgage. The property in the neighborhood is, say, in an enclosed community of 30 units. It's over-- generally sales for in excess of 400,000. There are a couple of other claims against the property, the Homeowners Association, etc. 

Attorney Tom Olsen: Got you.

Jerry: My question is, can I file, in the event it sales on the courthouse steps, for in excess of the 350, can I handle the – file the appropriate papers with the court myself or do I need to hire an attorney? 

Attorney Tom Olsen: I think that you need to at least get the advice of an attorney on how to do it, Jerry, but here’s so that our listeners understand. If the first mortgage holder has a now a judgment of $350,000 and it goes for sale in the courthouse steps, it will not sell for less than 350,000. 

But let’s just say, there are people there bidding and they end up bidding 400,000. Well, the first mortgage lender would get their entire 350,000. The other 50,000 would go into the court registry and would be available to pay other lien holders against that property, and you’re next in line. Jerry, that's good news. All right. 

So as far as your the legal process for you to make claim to that excess money, I think it is all relatively simple. I've just never done it before. So, Jerry, you might meet with an attorney and they might say, “Jerry, here's a couple of forms. Fill them out. Go do it yourself.” Or they might say, “Jerry, it's a little bit of complex. We’ll make sure we get it done right.” So there's no chance you’re losing that money.

Jerry, the good news is Colonel Airth is the attorney in my office that does mortgage foreclosures and foreclosure defense, and I would invite you to call Colonel at his office next week, and pursue that with him if you want to, but actually step number one is that the other mortgage foreclosure sale goes, Jerry, but beyond that if you need some help call Colonel Airth at my office at 407-423-5561.