You are correct that a first mortgage does not transfer to a new owner. What happens in a Florida county foreclosure or HOA foreclosure is that the first mortgage remains as a superior lien unless it was foreclosed, which is rare.
You now own the property subject to the first mortgage. You are not personally liable on the note, which is why the lender is telling you that you have no borrower relationship with them. That part is normal.
As the current title holder, you will receive notice if the mortgage lender files a foreclosure action. At that point, you have three realistic options:
- Defend the foreclosure from the 1st mortgage and rent out and try to make your money back, or try adn get mortgage dismissed.
- Negotiate a payoff or settlement with the lender and satisfy the lien
- Sell the property encumbered to another investor who understands how to resolve or price around the mortgage
There is nothing unusual or improper about your situation. This is simply the risk profile of buying properties at county foreclosure and HOA auctions, and it is why understanding lien priority before bidding is critical.
