# When the 2nd lender forecloses?

**URL:** <https://community.propertyradar.com/t/when-the-2nd-lender-forecloses/1194>\
**Category:** Foreclosure Investing\
**Created:** [September 22, 2009, 3:49am UTC](https://community.propertyradar.com/t/when-the-2nd-lender-forecloses/1194 "2009-09-22T03:49:19Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![Tim](https://avatars.discourse-cdn.com/v4/letter/t/ce73a5/32.png) [@Tim](https://community.propertyradar.com/u/Tim)\
**Post date:** [September 22, 2009, 3:49am UTC](https://community.propertyradar.com/t/when-the-2nd-lender-forecloses/1194/1 "2009-09-22T03:49:19Z")

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When I bid on an auction which is being foreclosed by the 2nd lender is the 1st lender paid off from the proceeds of the the auction?

For example, if the 1st loan is for $100K, and the 2nd loan for $500K and the winning bid at the auction is $300K, is the first lender paid $100K and the 2nd $200K, and the rest wiped out? Or does the 2nd lender get the $300K and I would still owe the 1st lender $100K?

Thanks for your help.

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**Author:** ![Sean](https://avatars.discourse-cdn.com/v4/letter/s/f0a364/32.png) [@Sean](https://community.propertyradar.com/u/Sean)\
**Post date:** [September 23, 2009, 5:26am UTC](https://community.propertyradar.com/t/when-the-2nd-lender-forecloses/1194/2 "2009-09-23T05:26:49Z")

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You would still owe the 1st.

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**Author:** ![Tim](https://avatars.discourse-cdn.com/v4/letter/t/ce73a5/32.png) [@Tim](https://community.propertyradar.com/u/Tim)\
**Post date:** [September 25, 2009, 10:09pm UTC](https://community.propertyradar.com/t/when-the-2nd-lender-forecloses/1194/3 "2009-09-25T22:09:19Z")

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How much time do you have to pay off of the 1st?

Can I just assume the loan and make payments on it or do I need to pay it off before I could sell it.

If you could pay off the first when you sell the property, it seems like it would be a great investment since you don’t need to come up with the capital to pay off the first immediately.

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**Author:** ![Sean](https://avatars.discourse-cdn.com/v4/letter/s/f0a364/32.png) [@Sean](https://community.propertyradar.com/u/Sean)\
**Post date:** [September 26, 2009, 5:18am UTC](https://community.propertyradar.com/t/when-the-2nd-lender-forecloses/1194/4 "2009-09-26T05:18:17Z")

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Technically most 1st loans will have a due on sale clause, and your purchase at trustee sale is considered a sale. That said, the only way they can force you to pay is to foreclose. If they haven’t yet filed for foreclosure that gives you a minimum of 4 months. That said, I have had a lot of luck approaching the prior homeowner, explaining the situation, and offering to bring their first current and make their payments until I resell the house. Great for them because it improves their credit, great for me because I don’t have to come up with the cash to pay it off, and I don’t rack up late charges and foreclosure fees if I choose not to pay it off.