Question

Kate purchased a townhome and obtained financing from Bank A on February 1, 2014. On April 1, 2014, she took out a home equity loan on the property with Bank B. On August 1, 2015, Kate refinanced her mortgage through Bank C, which resulted in Bank A’s loan being paid off. Bank B signed a subordination agreement related to Bank C’s loan. Which lender currently holds the subordinate loan?

Answer 1

Answer:Bank B

Step-by-step explanation:

Subordinate loan is a loan taken with a mortgage property, while the mortgagee takes first right on the property in case of defaults by mortgagor, the subordinate loan lender gets less piority to the mortgagee on default of the mortgagor.

In the above scenario Bank A is the mortgagee while Bank B entered into a subordinate loan. On the refinancing of the mortgage by Bank C it has taken the position of the mortgagee, while Bank B still holds the subordinate loan.