subject to 1st mortgage


#1

There is a property coming up for auction next month that i am interested in. However i have some concerns. While looking through the paper i noticed the property was not “subject to mortgage”. Legal definition for “subject to mortgage” as the philadelpia sheriff’s office has it is:

The property is NOT being sold as a result of the first mortgage, but as a result of delinquency on a subsequent mortgage. Successful bidders will not only be responsible for their bid price, but for all mortgages preceding the mortgage of the lender who foreclosed on the property.

This leads me to the conclusion that this property, which doesn’t have the above clause, must be a first mortgage (something that was confirmed by the sheriffs dept).

Yet, when i had a title search done, 2 open mortgages showed up. It appears as though the 2nd mortgage is foreclosing on the property. My concern is that if i am the winning bidder, i would be responsible for the first mortgage.

My question is it possible that the first mortgage was paid off (satisfied) and not recorded in the public records. If this is the case how could i confirm it. thank you for all the great advice and for your help.


#2

I forgot to mention that the first was a refinance. In the title search it basically states:

2005 construction loan 2nd (which is 2x the first)
2004 refi 1st mortgage

is it possible that the 1st was aborsbed by the 2nd? thanks again.


#3

The vast majority of mortgages and subsequent reconveyances are recorded at the county recorders office. Be sure to look under every possible variance of the homeowner’s title (e.g. Joseph B Homeowner and Joe Homeowner and check for joint spousal ownership). On rare occasions I have encountered circumstances when a full reconveyance (full payoff) of a loan has not been recorded. In one instance it was a loan made by a private individual and the title company responsible for doing the recording went bankrupt and did not follow through. I called the private individual and he was kind enough to send me an email stating that he had been fully paid on his loan and no longer had any financial interest in the property.


#4

While looking through the title search I found a ucc financial statement. Does the ucc establish seniority for the 2nd (is it like a subordination agreement)?