Escrow & Title
In NC, a 'subordination clause' in a deed of trust allows:
AThe borrower to pay less than the minimum payment
BThe lender's lien to be placed in a junior position to allow a new senior lien✓ Correct
CThe property to be sold without paying off the existing lien
DThe trust to be dissolved
Explanation
A subordination clause (or agreement) in a deed of trust voluntarily makes that lien junior (subordinate) to a new lien — commonly used when refinancing or adding a new first mortgage.
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- In North Carolina, the deed of trust is used instead of a mortgage. The deed of trust involves how many parties?Escrow & Title
- In NC, a 'subordination agreement' in mortgage financing allows:Property Ownership
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- North Carolina is primarily a 'deed of trust' state rather than a 'mortgage' state. What is the key difference?Finance
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Key Terms to Know
Deed of Trust
A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
LienA 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.
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