Finance
In Rhode Island, what is 'subordination of mortgage' and why might a lender agree to it?
AThe lender agrees to foreclose in second position
BA senior lienholder agrees to accept a lower priority position to allow a new loan with higher priority, often to facilitate refinancing or new construction financing✓ Correct
CThe borrower agrees to pay the second mortgage first
DThe lender agrees to reduce the interest rate
Explanation
Mortgage subordination occurs when a lienholder agrees to accept a lower priority (subordinate) position relative to a new or refinanced loan. It may be necessary to allow a construction loan or refinance to take first position.
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