Tax Foreclosures and the Mortgage

Question: What happens to the original mortgage on a home after a tax foreclosure?


Answer: The mortgage company is like an owner of the property. It receives notification of the taxes due, and can redeem the taxes to avoid a foreclosure. If the property goes through tax foreclosure (i.e., to deed), you as the investor own the property. However, in some states there is a legal period following tax foreclosure during which the previous owner (or mortgage company, lien holder, etc.) can challenge the sale. Otherwise, tax foreclosure wipes out the mortgage and most other liens, except federal IRS liens and county or city assessments. In New Mexico, mortgage liens may not be extinguished. In Pennsylvania, mortgage liens are not extinguished on properties sold at the Upset Price Sale. Properties not sold at the Upset Price Sale are auctioned again, free and clear of liens (including the mortgage), at the Judicial Sale.

Visit www.rogueinvestor.com/government_tax_sales_book.html for more information about tax sale investing.