Escrow & Title
In Michigan, a 'subordination agreement' in lending allows:
AA junior lien to remain in priority over a new senior lien
BA senior lien holder to agree that their lien will be subordinate to a new lien, typically to facilitate refinancing✓ Correct
CThe borrower to delay mortgage payments
DThe lender to take priority over tax liens
Explanation
A subordination agreement is a contract where a senior lienholder agrees to reduce their priority in favor of a new lien (e.g.
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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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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