Two upcoming NTS (Notice of Trustee Sales) against a property


#1

I am interested in a property which has upcoming NTS (Notice of Trustee Sale) on both the 1st & 2nd loan as there are NODs. The 1st NTS ?auction is happening 15 days before the 2nd. Per my understanding, the 2nd Loan and NOD /NTS against it should be wiped out automatically as part of the 1st NTS. ?I verified the 2nd NTS is not IRS. What am I missing here in my understanding? ? ? ?What are the?repercussions?or?items?I need to be careful about if I buy this property in the NTS against the 1st loan.

Thanks in advance,


#2

If you are buying the 1st DOT then the 2nd DOT and any/all " junior" liens/loans are “wiped out” to you as a trustee sale buyer. Just be sure to confirm that any other recorded debts are indeed “junior”… meaning that they have been recorded after (a? later date and/or doc number) the loan you are buying at the trustee sale. There are times when buying a 2nd position loan works out… but that should only be done when there’s equity left after paying off any recorded senior obligations.?One thing to look for is a subordination agreement. That can occasionally change the position of a loan going to sale. Subordination agreements are not common, but they are also not rare. So look for them and read them carefully if they apply to the loan going to sale. They are more common when the same lender is on multiple open loans. For example…let’s say BoA made a $150K loan in 2003 on a property worth $500K with no other open loans. Now let’s say the homeowner took out another loan from BoA in 2005 for $225K. The property might have gone up to $575K in value and BoA was comfortable that the home showed ample equity and the borrower was well qualified to take the loan. But before (or as part of) making such a large 2nd position loan, BoA would almost certainly include a subordination agreement that would make the earlier (senior date/rec #) loan subordinate to (junior to) the new large $225K loan


#3

Thanks so much for the insightful response. I just checked the record and found that - (1) Loan #1 is at much prior date (6+moths) ?before Loan #2. (2) Both loans are from different institutions (3) The Loan #1 is approx 12 times the Loan #2. (4) Both ?the NTS sales (TS#) clearly mentions the Loan position against which they are going. (5) I have not seen any?subordination?documents yet in our foreclosureradar tool here - II’ll try to check at the clerk’s office tomorrow.

Questions:?

  1. If I ?buy the property in NTS against the Loan position #1 which is 15 days earlier than the 2nd - will I still have to worry about the 2nd sale or can I assume that it will be wiped out automatically and I will get the Trustee Sale recordring /deed without ?issues?

  2. Given the above ?scenario /situation is there anything else that I need to keep in mind or look out for?

Finally?

  1. You mentioned that “There are times when buying a 2nd position loan works out financially … but that should only be done when there’s equity left? after?paying off any recorded? senior? obligations” - Can you please further explain with example?

Thanks again,


#4
  1. No. Once you received &? record the Trustees Deed Upon Sale (should received appx 5 to 10 days post auction) and the sale is thereby perfected, the 2nd is in no position to foreclose. They are effectively “wiped out” to you as the trustee sale buyer of the 1st. If the 2nd loan is large and it makes financial sense, the lender? may send a rep to the auction (trustee sale) to defend their position and bid to buy the 1st.?

  2. No. But be sure to promptly record the TDUS when you receive it

  3. Sure. 2nd loan foreclosing w a published bid in NTS of $125,227.94. There is also an open 1st of $300K (full debt due of appx $310K) and $4K in property taxes due. Property is worth $570K. Buy the 2nd at trustee sale and pay off senior debt that still has standing (total acquisition cost = $439,227.94 + $30K in marketing and rehab cost, less sales price 570,000 = appx $100K profit


#5

Thank you again. Its wierd that the property I am intersted in is shoowing as NTS for 1 and 2 however, till date the owner is trying to sell it. Its listed on MLS and the listing agent is activiely showing the property with the impression that the owner has given him that he has paid of all the remaining debt? and its all current now. Very wierd !!! I am really interested in this property but?nervous if later they will?create any issue???