Have a 1st trust deed lien (senior priority) and a 2nd TD lien. 1st TD holder forecloses, where does this leave the 2nd lien?

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Question

Have a 1st trust deed lien (senior priority) and a 2nd TD lien. 1st TD holder forecloses, where does this leave the 2nd lien?

Anonymous May 12, 2015 Bankruptcy 2 views 1 answers

The bank has foreclosed on my house. There is an outstanding loan and 2nd mortgage ( from a re-finance ). Both with different banks. The 2nd mtg is less than the loan. I filed for chap 7 Bk 2 years ago. The house is going to be auctioned and wondering where does this leave the 2nd lien. Does it go away if the first trust deed is satisfied but not in excess of the 1st TD value. Does it survive the foreclosure by the 1st TD holder? If the 2nd TD does survives, does the 2nd TD lien holder have to foreclose separately after the 1st TD foreclosure. If it doesn't survive then is the property free and clear? Is there anything that is done according to the chap 7 that was filed? Thank you

Anthony Roach · Answer 1 · 2026-06-15T14:36:34+00:00

When the first forecloses, and the second is held by a different lender, the second becomes a frozen out junior lienholder. That means the second can sue you directly on the note. The second cannot obtain a money judgment against you, however, if the second comes within the purchase money protection of Code of Civil Procedure section 580b. The issue that I see is whether you had the second discharged in bankruptcy. You mention you filed Chapter 7, but you are silent as to what happened.

Have a 1st trust deed lien (senior priority) and a 2nd TD lien. 1st TD holder forecloses, where does this leave the 2nd lien?

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