3) I think the 2nd gets wiped out at trustee sale. Fed tax liens must be settled, I’m pretty sure. So you should avoid properties that have these kind of red flags.
It is correct that the second gets wiped out at trustee sale. It is a subordinate loan to the first. Tax liens do have to be settled unless the property has been taken for ‘taxes’ as opposed to foreclosed upon. Also watch out for other liens as well (HOA, mechanics). I wouldn’t stay away from this type, but it is important to find all liens/mortgages associated with a property and determine what their disposition will be at sale, whether tax sale or foreclosure.
