What happens to junior interests during a foreclosure sale?

During a foreclosure sale, junior interests—such as second mortgages, liens, or other encumbrances subordinate to the primary debt being foreclosed—may indeed be eliminated. This occurs because a foreclosure primarily addresses the senior lien or mortgage, and once the property is sold to satisfy the obligations of the first mortgage, the new owner receives the property free and clear of junior lien claims. Thus, any junior interests are extinguished as they do not have priority over the foreclosure action initiated by the senior lender.

This process is significant for buyers at foreclosure sales since purchasing foreclosed property means they are acquiring it without the burden of existing junior interests, allowing for clear title and minimized risk of future claims against the property from those junior lienholders.

Other options pertain to misunderstandings about the implications of a foreclosure sale. Junior interests cannot become senior interests as that would contradict the principles of lien priority established in real property law. They also cannot remain unaffected since foreclosure directly impacts the ownership rights associated with the property. Lastly, while it is sometimes debated whether rights or interests might "transfer" under certain conditions, in general practice during foreclosure, junior interests do not transfer to the buyer; rather, they are extinguished by the sale.