When we sold our house in Arizona, the buyer didn't qualify for 100% so we carried 20%. We filed a lien with the county and set up payments with a title company so that the mortgage and our note would be paid at the same time. We also had an agreement with the first mortgage company that if foreclosure became necessary, we would work together. The mortgage was sold to a new company that refuses to work with us. They convinced the buyer to only send the payments directly to them, not to the title company and to stop paying us completely. We have been trying to talk with the mortgage company for months but they won't tell us anything and the buyer will not respond to our letters. We just received notice from the mortgage company's lawyer saying the house went into default in July and it will be auctioned in January, and we will get nothing. What do we do now? We have all the note documents that say that before the title can change hands, our note has to be paid but the lawyer says they don't have to pay us. Can we file a lis pendence? If yes, how do we do it? We'd be happy with even half the value of the note, something is better than nothing.

Sorry this is why they were a bad risk and why people don't like to have second mortages

At a foreclosure, what happens, is the court sells the property, if they have a 80,000 mortgage, and you have a 20 000 mortgage, they house is sold ( maybe) and a 100,000 home will be lucky to sell for 60,000. So any money gotten goes first to the 1st mortgage, and if there is any money left off from the first mortgage ( plus charges for sell, and legal fees) then you will get money.

So what happens happens almost never does the second mortgage holder ever gets any money if the house sells at foreclosure. So if it is gone info foreclosure, you can fairly well court your money gone.

Your note not to transfer is only to stop the buyer from selling, it will not stop the sale at either foreclosure or bankruptcy.