Finance
A North Dakota second mortgage lien position means that in a foreclosure sale:
AThe second lender is paid before the first lender
BThe first lender is paid first; the second lender is paid from any remaining proceeds✓ Correct
CBoth lenders share proceeds equally
DThe second lien automatically becomes the first lien upon default
Explanation
Lien priority generally follows the order of recording ('first in time, first in right'). In a foreclosure, the first mortgage lender is paid in full before the second mortgage lender receives any proceeds.
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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.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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