From: jrf30@aol.com (JRF30)
Newsgroups: misc.invest.real-estate
Date: 05 Apr 2004 20:35:48 GMT
Subject: Re: Buying property in foreclosure auction

>What difference does it make if its
>first, second or third mortgage,

Ohh Charles.  Bad question.  It worries me if you don't know the difference and
you want to buy at the courthouse steps.  Because it will burn you if you are
not knowledgable.

If it is a first, the second and third will dispapear when you buy the first. 
If it is a second, the first will STAY when you buy the second.  YOu still OWE
them that money.  If the third, then the first AND second will stay.

here's a way to say it in numbers.

If a hosue is worth $100,000, and the first is $65,000, and then they got a
second for $20,000 and finally a third for $11,000, then if you buy the first,
you own the hosue for $65,000.  A decent deal (assuming no tax liens, but this
conversation is only about mortgages).  If you buy a second, you pay $20,000
and OWE $65,000, so you own it for $85,000 invested.  NOT worht doing.  If you
buy the third, you pay $11,000 and OWE BoTh the $65,000 AND the $20,000, and
you are in it at $96,000.  If the first and second are also behind, it could
run to $110,000 with fees and such.  YOu are upside down,and lose money.

If you buy the second or thrid, and then the first is foreclosed upon, you lose
ALL your money UNLESS you buy the first out.  So if you are playing with only
$20,000 and buy the second, and dont have enough for the first, then you could
lose ALL your money when the first is foreclosed and that wipes out the second
(yours) and the third.  
Major difference.  You need to know that.  I hope this answer helps some.

John