In your position you have several options. You can buy the 1st mortgage now, wait and buy the final judgment for foreclosure (prior to foreclosure sale), bid on the property at the foreclosure sale, or contact the winning bidder after the sale regarding purchasing the property.
First, here is the mortgage foreclosure process in Pinellas County, Florida.
1. Mortgage (1st or 2nd) goes into foreclosure. Since you are in 2nd position, you will be listed as Defendant. Don't worry the 1st mortgage holder is not coming after you for payment, it is the most effective way to ensure that you are notified.
2. Have an attorney file an “answer” stating that your 2nd mortgage amount is still owed with all interest and penalties.
3. The Borrower will likely file for bankruptcy, which will cause the foreclosure proceedings to be put on hold (stay) until the bankruptcy is discharged or the stay is lifted.
4. The County Court will issue a Final Judgment for Foreclosure.
5. There will be a foreclosure sale held at the County courthouse.
6. The Borrower will have an additional 10 days to redeem that property by paying off both mortgages.
7. The winning bidder will be issued title to the property once the Borrower's 10 day redemption period ends with no redemption being made.
My recommendation would be to first have the property appraised by a state certified or MAI appraiser. If your loan docs are thorough, you will have the right to do this and add the appraisal fee to the mortgage amount. Then have a title agent “pull title”, let the agent advise you to what degree but if it were me I would get an “O&E”. Again, you should be able to add this fee to the loan balance. Then go to the foreclosure sale and bid up to an amount you feel the property is worth. REMEMBER, if you are the winning bid you will be responsible to pay any outstanding real estate taxes (should be reflected in the title work). Real estate tax liens are the only liens that survive foreclosure.
If you buy the first mortgage before the property is sold at the foreclosure sale, then you would have to complete the foreclosure proceedings. It is easier to wait until the foreclosure sale plus you don't have to pay attorney fees throughout the process which can be long and drawn out.
Prior to the foreclosure sale, contact the County Clerk to find out how payment must be made if you are the winning bidder. Most counties in Florida require a bank certified check by 11:00 AM the day of the sale. Don't get caught unprepared or you will lose the property.
I hope this helps and good luck!
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