Unit 14 exam
A homeowner has been paying her mortgage for several years and has built up equity. She decides to take out a home equity line of credit because she needs some cash. This credit will create ______.
A junior lien on the property
A foreclosure occurs January 1, 2016. Of the following, which lien takes priority?
A property tax lien filed January 1, 2014
Morris still owes his lender for the financing obtained in purchasing his home. Several years later, Morris took out a home equity line of credit. This means that ______.
If Morris is foreclosed on, the home equity line of credit won't be paid until Morris's first loan is paid off
What is the purpose of a lifting clause?
It allows a borrower to refinance a first mortgage without affecting its lien position even when a junior mortgage is in place.
What does the concept "first in time" refer to when discussing lien priority?
Liens are paid based on date of filing.
Allows senior liens to be refinanced without affecting the lien position of the junior loan
Lifting clause
The Morris family home went into foreclosure December 15, 2016, and sold January 1, 2017. Their contractor had begun work on May 15, 2015, and was not paid, and finally filed a mechanic's lien on October 1, 2016. What date will be used for lien priority for the mechanic's lien?
May 15, 2015
Allows a junior lien to take a lien position ahead of a senior lien
Subordination agreement