Can a junior mortgage holder bid on the secured property at Foreclosure sale?

I read somewhere online that "power of sale foreclosures" are an on going dispute of our rights being violated. In this article it stated that a majority of the states allow power of sale foreclosures vs judicial foreclosures. The power of sale rule allows the foreclosing beneficiary to bid on the property at the Trustee's Sale. The reason for this is the Trustee named on the Mortgage/Deed of Trust or the substituted Trustee is a third party holding the documents in "trust" for the debtor and beneficiary. When the payments become defaulted the beneficiary requests the Trustee to proceed with the foreclosure process. Since the beneficiary is not holding the Trustee Sale and a third party is this allows the beneficiary the right to bid on the property along with other potential buyers.

However, this article also states that any junior mortgage/deed of trust holders on the property are NOT allowed to bid on the property at the Trustee Sale since they are not the beneficiary foreclosing.

Does anyone know the laws of power of sale foreclosures. If so, is it true about the junior lienholders not being able to bid? Help please!!!

This is not true, at least in California. Each state has its own laws, but I find it difficult to believe that other states would prevent a junior from bidding. Juniors are afforded certain rights as they also have an interest in the property being foreclosed on.

Foreclosure sales are generally open to the public, for sale to the highest bidder, which also includes any junior lenders.

Hope this helps.

Best

You are correct to some degree. I live in Nevada which have similar laws to California. There are laws that protect junior lien holders secured position. However, if the jr. lien holder doesn't want to be wiped out by the foreclosure of a senior lien the jr. has the option to bring payments current until other options are exercised.

If the jr. lien holders opt to waive their rights and allow the sr. loan to proceed with the foreclosure why should they be allowed to bid at time of sale?

The issue the article I mentioned primarily dealt with our civil rights. That according to the 14th amendment we are entitled to certain rights that a "power by sale" foreclosure violates vs a judicial foreclosure which is handled by the courts and the property owner is allowed to prove their reasons for becoming delinquent in their payments and the court decides the manner in which the foreclosure is to be handled.

I am curious if anyone knows the details of the issues and our civil rights pertaining to the two types of foreclosures. By the way Nevada laws support the power by sale foreclosure process.

Thank you for your imput. I guess I should have been more detailed when posting the question. This is my first time posting to the forum, hopefully in time I will learn the proper way and get the hang of it.

Thanks again.

You are right in that a jr. lienholder has a right to cure, but that right to cure is not the same as their right to bid at a foreclosure sale. I do not see how failing to cure a senior default is waiving their right to bid at a public auction.

A jr. may cure a senior so that they can initiate their own foreclosure to protect their security interest, or they may decide to attempt to purchase the property for their own benefit. This is their right.

And the right to foreclose by sale is a contractual remedy. It's only allowed if the underlying security documents (which is signed by the borrower) allow the beneficiary/trustee to do so. It's not a right granted to any secured lender no matter the circumstances.

Does this somewhat answer what you're asking?