Escrow & TitleIntermediateAlaska Exam

In Alaska, a 'subordination agreement' in real estate allows:

AA senior lienholder to move its lien to a lower priorityCorrect

BA junior lienholder to take priority over a senior lienholder

CThe lender to increase the interest rate on an existing mortgage

DA buyer to assume the seller's mortgage

Why A senior lienholder to move its lien to a lower priority Is Correct

Answer A: A senior lienholder to move its lien to a lower priority

A subordination agreement allows a lienholder (often a first mortgage holder) to voluntarily agree to a lower priority position, allowing a new lien (often a new first mortgage from a refinance) to take senior position. This is commonly used when refinancing to allow the new lender to have first position.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.