Which of the following is the correct order of lien priority?

Liens generally follow the “first in time, first in right” rule, which says that whichever lien is recorded first in the land records has higher priority than later recorded liens. For example, a mortgage has priority over a judgment lien if the lender records it before the judgment creditor records its lien.

Where does the money go after a foreclosure sale?

If any sale proceeds are left after the first lien is paid in full, the excess proceeds go to the second lien—like a second-mortgage lender or judgment creditor—until that lien is paid off, and so on. A lien with a low priority might get nothing from a foreclosure sale.

What kind of liens have priority in a foreclosure?

Depending on state law, certain liens—like property tax liens, special assessment taxes, some HOA and COA assessment liens (called ” super liens “), and mechanic’s liens—can have priority over previously recorded liens. Lien priority determines the order in which creditors get paid following a foreclosure.

When is a legal precedent can be altered?

In addition, a legal precedent can be altered if an executive branch of a state or the federal government over-rides the decision based on an infringement of constitutional law or government power.

What happens to the second mortgage lien in a foreclosure?

The first mortgage lender will get paid off in full ($300,000), which leaves $20,000 to distribute. The second mortgage lender will get that $20,000. The judgment creditor gets nothing and its lien is eliminated in the foreclosure.

How many phases are there in the foreclosure process?

There are typically six phases in the foreclosure process and the exact steps vary state by state. Before a home is foreclosed on, owners are given 30 days to fulfill their mortgage obligations.

Which is first to be recorded in a foreclosure?

Usually, the mortgage you got when you bought your home is recorded first. If you have a second mortgage or home equity line of credit, your lender will have the second lien. Additional liens have priority based on their recording dates, not the amount or reason for the lien.

Can a lender foreclose on a home that is delinquent?

Your first mortgage lender can also foreclose if your mortgage loan is delinquent. However, since your mortgage balance is usually much higher than your delinquent home tax bill, many lenders will pay off unpaid property taxes to keep their first lien priority position. Each state has its own system for recording real estate liens.