Which term is used to refer to a junior lien?

Which term is used to refer to a junior lien?

• A. Senior lien
• B. Subordinate lien
• C. First mortgage
• D. Mezzanine loan

Answer: (B)

The term used to refer to a junior lien is a subordinate lien. A junior lien is a mortgage or other lien that has a lower priority than another lien against the same property. In the case of foreclosure, if a property is sold, the proceeds will first go toward paying off the senior lien (or primary mortgage) before any funds are distributed to the holders of subordinate liens. Subordinate liens are also common when multiple loans are taken out on the same property, with each subsequent loan having a lower priority in respect to repayment. This means that if the property is sold or foreclosed upon, junior lienholders may only receive repayment after all senior lienholders have been satisfied. Understanding this priority structure is essential for mortgage professionals to assess risk and potential recovery in case of default.

The term used to refer to a junior lien is a subordinate lien. A junior lien is a mortgage or other lien that has a lower priority than another lien against the same property. In the case of foreclosure, if a property is sold, the proceeds will first go toward paying off the senior lien (or primary mortgage) before any funds are distributed to the holders of subordinate liens.

Subordinate liens are also common when multiple loans are taken out on the same property, with each subsequent loan having a lower priority in respect to repayment. This means that if the property is sold or foreclosed upon, junior lienholders may only receive repayment after all senior lienholders have been satisfied. Understanding this priority structure is essential for mortgage professionals to assess risk and potential recovery in case of default.