Finance
In South Dakota, what is 'subordination' in mortgage lending?
AThe lender's agreement to accept a lower interest rate
BAn agreement by a lienholder to accept a lower priority position relative to another lien✓ Correct
CThe borrower's agreement to pay off junior liens first
DThe SDREC's authority over mortgage terms
Explanation
Subordination is an agreement by which a lien holder accepts a lower priority position, allowing a new lien to take precedence. For example, a seller may subordinate their second mortgage to allow the buyer to get first mortgage financing.
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