I guess I don’t take this to be much of a revelation. When a home goes to a trustee sale the second is generally wiped out. Even in a short sale the agreement by both lenders to approve a short (if there were 2 mortgages) usually the case will be a token award of a thousand bucks to the second, while the first gets the rest.
In the trustee sales the home usually conveys back to the lender for the first amount. Then the pricing of the home when it is put on the market is determined by a BPO (usually done by a broker selected by the lender) with an appraisal. Then the home gets put on the market.
The important thing will be how long the home sits on the market when it is an REO. As we saw in more distressed areas they sit longer until the lender gets his finger out of his nose and prices it more aggressively.
