Legal Question in Real Estate Law in Washington

Real Estate Foreclosure ob 2nd DOT/Heloc

If a 2nd DOT or Heloc completes a foreclosure sale, what happens to the underlying 1st in Washington State?

Property Value $600,000

1st $400,000

2nd $100,000

Opening bid on 2nd $100,000

1st doesn't show up to bid

Several parties bid

Thrid party wins bid at $150,000

1) Does the amount over the opening bid go the the homeowner?

2) Does the 1st come back after the homeowner for satisfaction of debt?


Asked on 7/30/08, 3:41 pm

1 Answer from Attorneys
Amir John Showrai The Pacific Law Firm, PLLC

Re: Real Estate Foreclosure ob 2nd DOT/Heloc

Your described situation where a second in line security interest goes to foreclosure is common, but not accounting for the first in line security interest is not common. In fact, it downright does not make sense to me.

I have to think something went wrong here, especially because the bidder went over the cost of the foreclosed second. If whomever purchased the property in question knew of the first mortgage, then in order to take title, they must satisfy the $400,000 first mortgage as well.

If the first mortgage was not revealed to the bidders, then the sale will likely not go through, since the holder of the $400,000 first has to be satisfied (meaning paid off) before they will sign off on the deed of trust.

Either way, if you are the now former owner, whose home was foreclosed upon, you will not see the excess proceeds, unless they are in excess of the first and second mortgages.

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Answered on 7/31/08, 12:18 am


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