Final answer:
A subordination clause allows the second mortgage to take priority in refinancing the first mortgage. The correct answer is b).
Step-by-step explanation:
A mortgage clause used in refinancing the first mortgage which allows the second mortgage to take the first place is called subordination. In this case, the second mortgage takes priority over the first mortgage, meaning that it would be paid off before the first mortgage in the event of default or foreclosure.
For example, let's say a homeowner wants to refinance their first mortgage and take out a second mortgage. The lender of the second mortgage may require a subordination clause to protect their interests in case of default. This means that if the homeowner defaults on their mortgage payments, the lender of the second mortgage would have priority in receiving the proceeds from the sale of the property.