>I'm skeptical of the "lien holder gets the equity" claim because it doesn't work that way outside of DC or in foreclosure generally, so I'd be very surprised i

>I'm skeptical of the "lien holder gets the equity" claim because it doesn't work that way outside of DC or in foreclosure generally, so I'd be very surprised it it wasn't a misunderstanding on the part of the author. I agree. The author suggests the owner owned the home free and clear, which I do not think is true. As you noted judicial foreclosures do not occur overnight, a free and clear owner of a $197k house would have plenty of time to: 1. take out a mortgage/HELOC for the $500-$5k tax lien, or 2. more extremely sell the home, pay the lien and walk away with the equity ($192k) before the filing of the foreclosure. Further, there is no judge that would not give such a defendant the time to pursue those options even during the proceeding if in fact the defendant owned the property free and clear. >Not only did he lose his $197,000 house, but he also was stripped of the equity because tax lien purchasers are entitled to everything, trumping even mortgage companies. This is from the article, and I think this is where the author could have been a little more forthright, by saying under such foreclosure and subsequent auctions the proceeds go 1st to any government liens, 2nd to mortgage holders based on superiority, and 3rd the remaining equity goes to the owner. Of course other lien holders could be shuffled into the equation (such as construction liens or HOA liens).