It really depends on the validity of the second party’s claim to the property. If the 2004 mortgage was taken out by someone who didn’t have an interest in the property (say, if there was fraud involved, coercion of the party who bequeathed the property etc.) then the mortgage didn’t actually attach and the mortgage holder wouldn’t actually have the right to foreclose. This would be highly unlikely though, and very difficult to prove prior to the foreclosure going forward. If the foreclosure goes through, the second party (the one fighting the inheritance) would have to sue to quiet title in his name and prove superior title. There could be state laws (such as statutes of limitation) that might be involved here – and the issue of the mental capacity of the second party is also an interesting one.