Final answer:
The mortgagee takes title subject to any other existing liens in a situation called a subject-to mortgage. This involves a new purchaser making payments on an existing mortgage while any pre-existing liens remain in place.
Step-by-step explanation:
The situation in which the mortgagee (lender) takes title subject to any other existing liens is known as a subject-to mortgage. This occurs when the purchaser of a property agrees to take over the current mortgage payments and becomes responsible for the debt without formally assuming the mortgage. The original mortgagor’s name stays on the mortgage, and while the purchaser makes payments, any pre-existing liens on the property at the time of this agreement remain in place.
Options such as a deed in lieu of foreclosure, judicial foreclosure, and non-judicial foreclosure involve processes where the lender seeks to resolve a defaulted loan or takes control of a property. These actions can lead to the extinguishment of certain junior liens on the property, unlike with a subject-to mortgage, where pre-existing liens are not affected by the change in who makes the payments.