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Answered
Does a FHA subordinate lien survive

I am bidding on a property foreclosed by a superior lien with a FHA subordinate lien that was named on Lis Pendens as defendant but wasn't named at all on the final judgement. Would the subordinate FHA lien survive?

Posted 25 days ago
  
  
Votes Newest

Answers


In almost all cases like this, yes, that subordinate FHA lien will survive the auction and become the winning bidder's responsibility. The Lis Pendens merely shows the plaintiff's initial intent to wipe out the lien, but the Final Judgment is the only document that actually executes it.

If the FHA was completely omitted from the Final Judgment, it usually means the plaintiff's attorney either failed to serve them properly, serving the federal government is notoriously strict, or explicitly filed a 'Notice of Dropping Party' to speed up their own foreclosure process. Because the court never officially foreclosed that specific interest in the final order, the FHA lien remains attached to the property.

Before bidding, you need to pull up the county court docket and look at exactly what happened between the initial complaint and that judgment. Look specifically for the returns of service for the FHA/Secretary of HUD, or any notices of voluntary dismissal.

As a side note, even if it was just a clerical error on the judgment and they were properly foreclosed, federal liens carry a statutory 1-year right of redemption under 28 U.S.C. § 2410. Always assume a missing defendant on a Final Judgment means you are buying their debt!

Posted 20 days ago
  
  
Damon Simon
204 × 5 Administrator
270 Views
1 Answer
25 days ago
20 days ago

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