The things that can happen to the second mortgage after the foreclosure sale are:

The second can foreclosure to become the owner of the property susbject to the first loan.

Negotiate with owner if a short sale is obtained. (this must happen for a short sale to close)

Sue the mortgagor after the foreclosure for outstanding debt. (when first forecloses the second is no longer associated with the property but usually the mortgagor still owes the money)


Keith Manson
First Weber Group
Certified Distress Property Expert
Greenfield, Wisconsin

The second trust deed will be paid with any funds that are made over what is owed on the first mortgage. In this market, however, most sales fall short of paying off the first in full, and the second is wiped out. The holder of the second can start foreclosure proceedings by following all the legal requirements, and possibly negotiate with the holder of the first. I am currently working with someone who carried back a second for the buyers of his property, had to foreclose, got property back, and is trying to work with the new lender for the first mortgage to modify that loan. I hope this helps answer your question.

Merry