What happens when junior lien foreclose on the house?

[cv2]

The other day somebody told me that when junior lien foreclose on the house, it is junior lien holder’s responsibility to pay the senior liens. Is this true?

The reason I am interested in this is because in our complex we got some deadbeats who have not paid HOA dues for over a year, in the $3K. We have put lien on them but we also started foreclosure on them. Our reason is that when the unit is foreclosed, the mortgage company will step up and take it back. Once the change of ownership happens, although we can’t retrieve the over-due HOA fees, we can at least start collecting HOA fees from the new owner from the time of transaction. It is not a perfect solution for HOA because it lost the over-due HOA fees forever in the foreclosure but with the housing market like it is. it is unlikely those HOA fees would ever got recovered. Rather, doing the foreclosure will stop the bleeding and HOA can move on.

But if foreclosure means that HOA will hold the title of the unit and have to pay the mortgages, we are in deep doo-doo. Can anybody give me some responsible authoritative opinion on this?

Your help are greatly appreciated.

[EconProf]

Congratulations, you are indeed in deep doo-doo.
You would indeed be on the hook for the 1st. So the question now is, what is the amount of the mortgage vs. the likely proceeds from the sale.
Don’t forget to include the condition of the unit when you take over months from now, the full selling costs probably months later, and the then-balance on the 1st, including all late fees, penalties, etc.

[EconProf]

Congratulations, you are indeed in deep doo-doo.
You would indeed be on the hook for the 1st. So the question now is, what is the amount of the mortgage vs. the likely proceeds from the sale.
Don’t forget to include the condition of the unit when you take over months from now, the full selling costs probably months later, and the then-balance on the 1st, including all late fees, penalties, etc.

[EconProf]

Congratulations, you are indeed in deep doo-doo.
You would indeed be on the hook for the 1st. So the question now is, what is the amount of the mortgage vs. the likely proceeds from the sale.
Don’t forget to include the condition of the unit when you take over months from now, the full selling costs probably months later, and the then-balance on the 1st, including all late fees, penalties, etc.

[EconProf]

Congratulations, you are indeed in deep doo-doo.
You would indeed be on the hook for the 1st. So the question now is, what is the amount of the mortgage vs. the likely proceeds from the sale.
Don’t forget to include the condition of the unit when you take over months from now, the full selling costs probably months later, and the then-balance on the 1st, including all late fees, penalties, etc.

[EconProf]

Congratulations, you are indeed in deep doo-doo.
You would indeed be on the hook for the 1st. So the question now is, what is the amount of the mortgage vs. the likely proceeds from the sale.
Don’t forget to include the condition of the unit when you take over months from now, the full selling costs probably months later, and the then-balance on the 1st, including all late fees, penalties, etc.

[cv2]

If this is so unfair to other homeowners. A irresponsible person bought at the top of the market. He got a zero-down ARM and rent it out. When the market goes down, he just stop paying HOA fee and property taxes while taking in rents. All he need to do is to pay his mortgage and he will forever live off other homeowners unless the market recovers.

Let’s say HOA got the house and have no intention to pay the mortgage because the mortgage is not even in HOA’s name. What will happen now? I assume the mortgage holder could foreclose now. How would this affects the HOA? Does the HOA have credit scores, like us regular folks? Can the mortgage has any recourse against the HOA?

Thanks.

[cv2]

If this is so unfair to other homeowners. A irresponsible person bought at the top of the market. He got a zero-down ARM and rent it out. When the market goes down, he just stop paying HOA fee and property taxes while taking in rents. All he need to do is to pay his mortgage and he will forever live off other homeowners unless the market recovers.

Let’s say HOA got the house and have no intention to pay the mortgage because the mortgage is not even in HOA’s name. What will happen now? I assume the mortgage holder could foreclose now. How would this affects the HOA? Does the HOA have credit scores, like us regular folks? Can the mortgage has any recourse against the HOA?

Thanks.

[cv2]

If this is so unfair to other homeowners. A irresponsible person bought at the top of the market. He got a zero-down ARM and rent it out. When the market goes down, he just stop paying HOA fee and property taxes while taking in rents. All he need to do is to pay his mortgage and he will forever live off other homeowners unless the market recovers.

Let’s say HOA got the house and have no intention to pay the mortgage because the mortgage is not even in HOA’s name. What will happen now? I assume the mortgage holder could foreclose now. How would this affects the HOA? Does the HOA have credit scores, like us regular folks? Can the mortgage has any recourse against the HOA?

Thanks.

[cv2]

If this is so unfair to other homeowners. A irresponsible person bought at the top of the market. He got a zero-down ARM and rent it out. When the market goes down, he just stop paying HOA fee and property taxes while taking in rents. All he need to do is to pay his mortgage and he will forever live off other homeowners unless the market recovers.

Let’s say HOA got the house and have no intention to pay the mortgage because the mortgage is not even in HOA’s name. What will happen now? I assume the mortgage holder could foreclose now. How would this affects the HOA? Does the HOA have credit scores, like us regular folks? Can the mortgage has any recourse against the HOA?

Thanks.

[cv2]

If this is so unfair to other homeowners. A irresponsible person bought at the top of the market. He got a zero-down ARM and rent it out. When the market goes down, he just stop paying HOA fee and property taxes while taking in rents. All he need to do is to pay his mortgage and he will forever live off other homeowners unless the market recovers.

Let’s say HOA got the house and have no intention to pay the mortgage because the mortgage is not even in HOA’s name. What will happen now? I assume the mortgage holder could foreclose now. How would this affects the HOA? Does the HOA have credit scores, like us regular folks? Can the mortgage has any recourse against the HOA?

Thanks.

[Anonymous]

cv2: The Piggs are a great resource, but you definitely need a real estate attorney for this one.

[Anonymous]

cv2: The Piggs are a great resource, but you definitely need a real estate attorney for this one.

[Anonymous]

cv2: The Piggs are a great resource, but you definitely need a real estate attorney for this one.

[Anonymous]

cv2: The Piggs are a great resource, but you definitely need a real estate attorney for this one.

[Author]

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