Escrow & Title
A Minnesota property has a first mortgage, a second mortgage, and a judgment lien from a civil lawsuit. The judgment lien was filed before the second mortgage was recorded. In a foreclosure of the first mortgage, what happens to the junior liens?
AAll junior liens are automatically satisfied from foreclosure proceeds
BJunior liens are wiped out if proceeds are insufficient, but the lienholders may still pursue the borrower personally✓ Correct
CJunior liens transfer to the new property owner after foreclosure
DJunior liens must be paid in full before foreclosure can proceed
Explanation
In a Minnesota mortgage foreclosure, the first mortgage foreclosure extinguishes junior interests (second mortgage, judgment liens) that were recorded after the first mortgage. However, the holders of those junior interests may still pursue personal judgments against the borrower. The foreclosure eliminates the lien on the property but not necessarily the personal liability of the borrower.
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