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Made a huge mistake, need help

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. :disappointed: