Finance
A Texas homeowner refinances and receives a new first mortgage. The existing second mortgage (a home equity line) is:
AAutomatically subordinated to the new first mortgage
BRequired to be subordinated to the new first mortgage (subordination agreement) or paid off✓ Correct
CConverted to an unsecured loan
DCancelled by the new first mortgage
Explanation
When refinancing a first mortgage, any existing second lien (HELOC or home equity loan) must either be paid off or must execute a subordination agreement agreeing to remain junior to the new first mortgage, since liens generally have priority in order of recording.
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