What is a Junior Lien Holder?

Posted on October 1, 2010


When the mortgagor purchases the dwelling, the mortgagee puts a lien on the property, making the property collateral for the monies borrowed. Then, if the borrower cannot pay the loan, the bank can sell the property to be reimbursed. Sometimes there are several liens on the property, the senior lien being the debt that has a priority in terms of getting paid first, and the junior lien being paid after that. A junior lien holder who wants to foreclose on property must reimburse the senior lien, to prevent the senior lien holders from foreclosing on that amount.

At a foreclosure sale, the proceeds of the sale go first to the senior lien holder, or first foreclosing creditor, and if there is extra left, it goes to the second lien holder, but if there isn’t, then the junior lien holder is left out in the cold.

Sometimes the senior lien holder will make a credit bid up to the amount of the money owed, since the foreclosure process merges that debt into title. Junior lien holders will have to bid cash. So de facto, the senior lien holder will take the title by way of a trustee’s deed by bidding the amount of the debt, and that deed delivers title, with nothing paid to junior liens.

 See Axsmith.net for more details.  Christine Axsmith, Esq. is a Washington, DC – based attorney specializing in foreclosure fraud, illegal foreclosure, real estate fraud.  Her credentials can be viewed at her LinkedIn profile.  The Axsmith Law website has a wealth of information for review related to elder law and foreclosure prevention. 

Other sources of valuable information are the AARP website, the Federal Trade Commission website and the HUD website.  See Axsmith Law web site to speak to an attorney.

Wikipedia on Foreclosure
HUD Foreclosure Prevention Programs
Foreclosure Houses – Get Your Name Off This List!
Foreclosure Misc