Escrow & Title
What is 'equitable subrogation' in Delaware mortgage law?
AA borrower's right to be substituted into the lender's position after payoff
BThe doctrine allowing a lender who pays off a prior lien to be subrogated to that lien's priority position — protecting a refinancing lender who pays off a first mortgage from having their lien subordinated to an intervening junior lien they didn't know about✓ Correct
CThe right of a title insurer to step into a lender's position after paying a claim
DA process for substituting one mortgage for another without changing terms
Explanation
Equitable subrogation protects refinancing lenders who inadvertently lose priority when they pay off a prior mortgage and an intervening junior lien (unknown at the time of refinancing) takes priority. Delaware courts apply equitable subrogation to place the refinancing lender in the position of the paid-off lender, preventing the junior lienholder from receiving an unearned windfall. Title insurance provides additional protection.
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