Yesterday at the live auction I was a successful bidder on the foreclosure property, the opening bid was $20K, there was a bidding war and I won for $241K, but then I found out that I was bidding on the 2-nd lien, the HELOC. There is a senior lien is for $278K.
At the auction, they said that the money I paid will go to the trustee company which originated this foreclosure auction.
Can somebody explain to me if the amount I paid will be distributed to the senior lien or I lost everything? Please help…I don’t know what to do.
Hi Vlad,
I’m really sorry I didn’t see your question sooner. It was flagged as spam for some reason, and my team only saw it minutes ago.
Unfortunately if you bid on a junior loan, it will typically not be distributed to the senior lien. It will go instead to pay off the lien you bid on, and then any extra will go to other junior liens, and then finally the homeowner.
Had I seen this sooner, I would have advised you to try to get the sale overturned. I’ve seen bidders even offer to pay for an attorney for the homeowner to try to challenge the sale (which may not work if most of the money is going to the homeowner). Often if you do this quickly enough, the lender would rather take it to sale again vs. deal with the threat of lawsuits.
That said, laws vary a lot by state, and you didn’t mention which state you were in, so it’s possible that things may be different where you bought. Given the money involved I’d try to find an attorney in that state that specializes in foreclosures. Make sure they are a real expert who is already familiar with your state’s foreclosure statutes.
Apologize again for not answering sooner, hopefully its still helpful. Or at least helpful to the next person looking for answers here. 
PLEASE HELP! Hi Sean_Otoole I seen your reply to this post and I tooo made a HUGE MISTAKE and hope you can give me advice. I bought a home at Auction on Friday morning 3-6-2020 and when I arrived at the home I found it had a fire inside and was a complete loss! The neighbor came over and indicated to me that it was her sisters home who lived in Alaska (I’m in Washington State) and she was murdered!!! Not in the home but someplace in Alaska. She passed away May of 2019. The bank filed notice of sale on 10-23-2019 and I do not see a notice of “due diligence” was recorded with the county. It sounds like the son and sister were never notified by the trustee. I am overwhelmed with what to do. Is there any way to cancel this sale? One last part… Although we did our due diligence there was a huge mistake by Auction.com, they posted the main photo of a home that was not the house and a shop that was not the that is on this property. The shop is half the size of the one they show… Due to the long driveway with multiple no trespassing signs we were never able to drive up the hill to verify the photos we were seeing, all we had were the ones we could find on line and on the county site… I plan to call Auction.com tomorrow to discuss but I know if I have any chance I need to make my moves now before it is too late? I also considered trying to cancel my cashiers check before it goes through the bank but think there may be some major resources to doing that too. Any advice would be appreciated.
Rodandreel - I’m so sorry I missed this. Would love to know how it turned out, or if there is anything I can still help with at this point.