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2nd mtg lender allowed to sell house - is this normal?

This didnt happen to me but to someone i know — it seems like a very unorthodox situation but tell me if you have seen it it and share your feelings.

2nd mortgage - very small - under $50K with a major national bank. 1st mortgage - over $200 K is with a really sleazy lender. House was appraised over $400K

Lender #2 was allowed to conduct a foreclosure sale, with the stipulation that the buyer has to “take on” Mortgage 1.

A foreclosure sale was conducted in Spring 2019. The buyer won with a bid of $59,000 and this is the reported sale price with the county / city. The buyers are listed as the owners of record.

Fast forward to late 2019. Lender 1 (again with a horrific reputation) either is reneging on the deal or could not qualify the buyer / new owner

They are now suing in a foreclosure, husband and wife that bought the property and the previous owner. The foreclosure is stalled right now because Lender 1 cannot locate the previous owner.

The only thing i could think of is Lender 1 thinks why should we do a deal with the buyers and maybe make 3,000 in closing costs when we can make $200,000 in foreclosure sale

Any thoughts?

submitted by /u/Gateway2000PC
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/evgynz/2nd_mtg_lender_allowed_to_sell_house_is_this/
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