I argued that courts should use their equitable powers to recharacterize mezzanine loans and preferred equity investments as junior mortgages.
Unlike traditional junior mortgages or even silent second mortgages, mezzanine loans are very subordinated compared to other traditional real estate loans.
Although the solution becomes more complex when the junior mortgage is considered, the result is much more in line with market evidence.
09) is the estimated value of the loan assumption, including the effect of the junior mortgage required to make the purchase possible.
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.
Most courts stress that "[p]ublic policy requires [the] revival of junior mortgages.
Potentially troubling are the "125 LTV loans," junior mortgages in which the borrower is allowed an aggregate mortgage debt totaling as much as 125 percent of the market value of the mortgaged property.
Although such junior mortgages may be seen as a desperate measure for cash-strapped homeowners, they can provide benefits to both the borrower and the lender.
The mortgage loans consists of adjustable-rate home equity lines of credit and fixed-rate, closed-end home equity loans with combined loan-to-value (CLTV) ratios up to 125%, and adjustable-rate first lien mortgage loans with initial interest-only periods, secured by first, second or more
junior mortgages or deeds of trust on residential properties.
Loan group I consists of adjustable-rate home equity lines of credit with combined loan-to-value (CLTV) ratios up to 125%, secured by first, second, or more junior mortgages or deeds of trust on residential properties.
Loan group II consists of fixed-rate, closed-end home equity loans with CLTV ratios up to 125% secured by first, second, or more junior mortgages or deeds of trust on residential properties and adjustable-rate first lien mortgage loans with initial interest-only periods.
Loan group I consists of adjustable-rate home equity lines of credit with combined loan-to-value ratios (CLTV) generally up to 100%, secured by first, second or more
junior mortgages or deeds of trust on residential properties.
