Junior mortgage

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Junior mortgage

A mortgage that will be satisfied only after more senior mortgages have been satisfied. E.g., a first mortgage will be satisfied prior to a second or a third mortgage.

Junior Mortgage

A mortgage secured by a lien on a property that is subordinate to another mortgage on the same property. One may take out a junior mortgage to pay for home repairs or for any number of other reasons. A junior mortgage carries a higher interest rate than a primary mortgage because the lien is less secure. A second mortgage is a junior mortgage, as are third and fourth mortgages. See also: Piggyback mortgage.
References in periodicals archive ?
The growth of mezzanine loans is due in part to the national rating agencies' belief that traditional junior mortgage financing increases the likelihood and severity of default with the first mortgage.
Nearly all the mathematical models of the value of assuming a favorable mortgage promulgated to date fail to deal effectively with the need, especially in the residential market, for a second junior mortgage to bridge the gap between the assumed loan and the buyer's equity.
The sale price was $115,000 paid by assumption of an existing 7% loan, a junior mortgage bridging the gap between the balance owed on the assumed loan and an 80% loan-to-value ratio, and cash equal to 20% of the purchase price.
Absent the junior mortgage, the cash equivalent price would be $115,000 minus the difference between the amount owed on the assumed loan on the date of assumption and the present value of the assumed mortgage payments discounted at the market interest rate for conventional loans (10% in this example).
The textbook or paradigm case is the purchasing mortgagor who asserts the destruction of a junior mortgage where the mortgagor is personally liable on its underlying obligation.
Finally, survival is justified where there is a provision in a junior mortgage specifically obligating the mortgagor to pay or discharge any senior liens.
Of course, if we assume there is a mortgage lien that was previously junior to a judgment lien and that the mortgage lien survives the foreclosure, and that the junior judgment lien is destroyed but immediately reattaches, then logic suggests that the previously senior judgment lien could lose priority to the previously junior mortgage lien.

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