Can a Second Mortgage Have Priority Over a First Mortgage?
Full Question:
Answer:
A mortgage loan will typically create a lien on a home and if filed with the recorder’s office before another debtor, the mortgage lien will be entitled to be paid first before the remaining proceeds, if any, can be paid to junior creditors. The answer will likely depend on whether the first lender filed the mortgage in the county recorder’s office where the property is located, and if so, will agree to subordinate the loan. Subordination means an agreement to put a debt or claim which has priority in a lower position behind another debt, particularly a new loan. A property owner with a loan secured by the property who applies for a second mortgage to make additions or repairs usually must get a subordination of the original loan so the new loan has first priority. A declaration of homestead must always be subordinated to a loan.
