Dear Customer (name blocked for privacy),

Normally, the sale value of a foreclosed or bank sold home is less then the full amount the "owner" borrowed on the home. Where there are 1st and 2nd mortgages the lenders take from the sale in order of thier security agreements. That means that the lender for the 1st mortgage will be repaid, as much as possible for the 1st mortgage and, what ever is left over, if any, goes to the 2nd mortgage holder. BUT, lenders, unless they agree otherwise with the "owner" of the property, have rights to be repaid for the full amount of the loan they made, and if a foreclosure sale does not fully pay them off, then they can file suits against the "owner" to have the owners pay them the full amount the owner borrowed.

Normally, property liens, such as mechanic's liens, are filed with the county recorder's or tax assessor's office where the property is located - in Orange County you should contact the followng offices to ask them about liens - http://www.oc.ca.gov/recorder/default.asp and http://www.ocgov.com/assessor/