Looking at 1st & 2nd TD's


#1

We’re looking at a potential auction property that has a first and a HELOC.? The first was a re-fi that was taken out a couple of years after the HELOC.? The first is foreclosing.? Am I correct in asuming that even though the first was taken out after the HELOC that it is in primary position and the sale will wipe out the HELOC debt?
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Also, I have copies of both TD’s, and I’m wondering where to look in these for a possible subordination clause.? Thanks!


#2

First in time is first in line. I’ve seen loans labeled as seconds that were actually firsts, and vice versa. You should definitely look very carefully for a subordination agreement - as that is certainly a possibility with a heloc like this. Should be a separately recorded document. Either do a thorough name search at the county, or if you are new to this I’d STRONGLY recommend getting a prelim from a title company and reviewing it with their title officer.
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If you are going to buy at auction - you need to take your title officer to lunch. Everyone knows their esrow officer, but the title officer is your important go to person in this business when you are struggling with something that doesn’t make sense.