A mortgage that ranks below another lien on the same property is called a?

A mortgage that ranks below another lien on the same property is called a?

• A. Senior mortgage
• B. Junior mortgage
• C. Base mortgage
• D. Secondary mortgage

Answer: (B)

Understanding lien priority helps explain this. When a property has more than one lien, the one with higher priority gets paid first from foreclosure proceeds. A mortgage that ranks below another lien is called a junior mortgage. It is subordinate to the senior lien, so the senior lien is paid off first, and the junior mortgage only receives whatever remains, if anything. If there isn’t enough to cover the senior lien fully, the junior lien may receive nothing and can take a loss. This is why homeowners often have a first (senior) mortgage and may also take out a second mortgage (junior) for extra borrowing, accepting higher risk for the lower-priority claim. The terms base or secondary aren’t the standard way to describe this ranking.

Understanding lien priority helps explain this. When a property has more than one lien, the one with higher priority gets paid first from foreclosure proceeds. A mortgage that ranks below another lien is called a junior mortgage. It is subordinate to the senior lien, so the senior lien is paid off first, and the junior mortgage only receives whatever remains, if anything. If there isn’t enough to cover the senior lien fully, the junior lien may receive nothing and can take a loss. This is why homeowners often have a first (senior) mortgage and may also take out a second mortgage (junior) for extra borrowing, accepting higher risk for the lower-priority claim. The terms base or secondary aren’t the standard way to describe this ranking.