Question

When a borrower defaults on a mortgage, the lender may take actions such as foreclosure or a forced sale under the power of sale. Explain the concept of mortgage priorities in the event of a property sale, emphasizing the priority of the first mortgage and the order in which subsequent mortgages are addressed. How does this prioritization impact the distribution of funds in the case of a property sale or disposition?

Answer 1

Mortgage priorities determine the order in which different mortgages are addressed when a borrower defaults on a mortgage. The first mortgage holds the highest priority and is paid off first, followed by subsequent mortgages. This prioritization impacts the distribution of funds in a property sale or disposition.

Step-by-step explanation:

Mortgage priorities refer to the ranking of different mortgages in terms of priority when a borrower defaults on a mortgage and the property is sold. The first mortgage holds the highest priority and is paid off first, followed by subsequent mortgages in the order in which they were established. This prioritization impacts the distribution of funds in the case of a property sale or disposition, as the proceeds from the sale are first used to pay off the first mortgage, and any remaining funds are then used to address the subsequent mortgages.