Finance
In Minnesota, a 'subordination clause' in a mortgage agreement means:
AThe mortgage becomes the most senior lien automatically
BThe lender agrees to accept a lower priority position than other liens, such as allowing a new first mortgage to take priority✓ Correct
CThe borrower must obtain the lender's approval before selling
DThe loan is subordinated to the property's market value
Explanation
A subordination clause allows a mortgage holder to agree to take a lower lien priority position than another lender. For example, if a property has a first mortgage and a developer needs a construction loan to take first priority, the existing lender may sign a subordination agreement. This is common in Minnesota development financing.
Related Minnesota Finance Questions
- A Minnesota property is appraised at $280,000 but the purchase price is $295,000. The lender will base the loan on:
- A Minnesota home equity loan (second mortgage) allows a homeowner to:
- A Minnesota borrower takes out a $320,000 mortgage at 6% annual interest. What is the first month's interest?
- Private mortgage insurance (PMI) is typically required when the buyer's down payment is:
- Under the Truth in Lending Act (TILA), lenders must disclose all of the following EXCEPT:
- Points paid on a mortgage in Minnesota represent:
- USDA Rural Development loans in Minnesota are designed for:
- The debt-to-income (DTI) ratio that most conventional loan programs use as a guideline for qualifying borrowers is generally no more than:
Practice More Minnesota Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Minnesota Quiz →