Escrow & Title
A NJ 'short payoff' at closing (where a second mortgage lender agrees to take less than owed) requires the lender's prior approval. The second lien holder is typically willing to accept less because:
ANJ law requires it
BThey would receive nothing if the first mortgage forecloses and there is no equity left after the first lien is satisfied✓ Correct
CSecond mortgages are automatically discharged at sale
DThe NJREC negotiates the payoff
Explanation
In a short sale scenario, if the property has no equity after the first mortgage, a junior lien holder may agree to a short payoff to avoid receiving nothing in a foreclosure proceeding. Negotiating this requires the lienholder's written approval.
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