A property is encumbered by a first mortgage of 60,000 and a second mortgage of 23,500. The property has just been sold at a foreclosure auction to a speculating investor for 88,000. Assume that all costs of the foreclosure sale are included in these balances. Which of the following statements is FALSE regarding the distribution of funds?
1) The first mortgagee received 60,000.
2) The second mortgagee received 23,500.
3) The second mortgagee receives nothing unless he forced the foreclosure auction.
4) The former owner receives 4,500.