Finance
What is 'subordinate financing' and when is it used in Pennsylvania real estate transactions?
AFinancing arranged through a subordinate (junior) lender at higher-than-market rates
BA second or junior mortgage that occupies a lower lien priority than the first mortgage, used to bridge the gap between the first mortgage and the purchase price✓ Correct
CA PHFA program specifically designed for lower-income buyers in subordinate positions
DFinancing from a seller who is willing to subordinate their interest to the buyer's needs
Explanation
Subordinate financing (second mortgages, HELOCs, mezzanine loans) holds a lower priority position than the first mortgage. In Pennsylvania, subordinate loans are commonly used for: (1) down payment assistance (PHFA second mortgages), (2) commercial real estate capital stacks (mezzanine + senior debt), and (3) bridge financing.
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