Lets see if I get this right with my mystical magic 8 ball.  You're buiyng a foreclosed house from the 3rd mortgage spot.Here's the only reason why you will buy the house from the 3rd position, the house is worth more than the 1st and 2nd mortgage and the 3rd mortgage together.I'll give some numbers to make it work or not work.  Lets say the house is worth approximately $425,000.  The 3rd mortgage is $10,000 and they are foreclosing.   You can pick up the 3rd mortgage for say $5,000.  This mean for you to own the house full and clear, at the time of the foreclosure sale you'll need $355,000 in cash. (technically $70,000 in equity).So the answer to your question is yes, if you buy this foreclosure, you'll need to pay the first and second mortgage off plus taxes.