FinanceIntermediateAlabama Exam

A subordination agreement allows:

AA senior lien to take priority over a more recently recorded one

BA lien holder to voluntarily accept a lower priority positionCorrect

CA borrower to defer mortgage payments

DA lender to require additional collateral

Why A lien holder to voluntarily accept a lower priority position Is Correct

Answer B: A lien holder to voluntarily accept a lower priority position

A subordination agreement is a lien holder's consent to allow their lien to take a lower (subordinate) priority position than it would normally hold based on recording date.

Exam Tip: Finance

Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.

Key Finance Terms in This Question

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

People Also Study

Key Terms to Know

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.

Debt-to-Income Ratio (DTI)

A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.

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