In order for a new mortgage to hold the first lien position, what must be conducted?

For a new mortgage to hold the first lien position, a subordination process must occur. Subordination involves altering the priority of existing liens against a property, allowing a new mortgage to take precedence over previously recorded liens. This is essential because when multiple mortgages are recorded against a property, the priority in which they are paid in the event of a foreclosure is determined by their recording order.

In most cases, if a new mortgage is taken out, and it needs to be in the first lien position, it may require subordination of existing liens. This might involve negotiations with the holders of those existing liens to agree to subordinate their interests in favor of the new mortgage. Without this step, the new mortgage might be placed behind existing liens, which can jeopardize its security and repayment structure.

Choosing subordination ensures that the new mortgage is recognized as the primary claim against the property, which is crucial from both a risk management and lending perspective. Other options such as foreclosure, refinancing, or discharging previous mortgages do not achieve the necessary position for the new mortgage to be first in line.