In a rather odd turn of events, the 2nd mortgage holder – started it’s own foreclosure WITHOUT reinstating the 1st mortgage.
This means the building will be auctioned off for whatever the 2nd mortgage is due. And whoever buys the building, will buy it with the ~2.8 million 1st mortgage still wanting to get paid.
Normally when a junior lien like a 2nd mortgage forecloses it will first pay the 1st mortgage for any overdue amounts they are owed, else you risk having the 1st mortgage take the building or demand payment for the full amount the 1st mortgage is due. But in this case, the 2nd mortgage appears to be going where very few have gone before, and they will attempt to sell a building, that the 1st mortgage has been in the process of foreclosure for over 3 years.
Public listing of the Trustee Sale is in today’s San Jose Post Record Newspaper. With public auction scheduled for August 15, 2018!
UPDATE: 8/14/2018 – the property owner has declared bankruptcy, and this sale has been delayed.