What is mortgage priority and why is it important when multiple lenders are involved?

• A. The order of claims on the property in default; higher priority lenders are paid first from sale proceeds.
• B. The speed of loan approval.
• C. Interest rate ranking among lenders.
• D. Priority refers to which lender funds the loan first.

Answer: (C)

Mortgage priority is the order in which lenders have a claim on a property’s proceeds if the borrower defaults. When several liens exist—such as a first mortgage, a second mortgage, a line of credit, or tax liens—the sale proceeds are used to satisfy those claims from the top of the lien hierarchy. Senior liens are paid first in full, and only after them are junior liens paid; if there isn’t enough money, the junior lenders may receive little or nothing. This matters because it determines who gets paid first and how much risk each lender bears, which can influence financing terms and borrower decisions. The other statements are not about this payment order: it's not about loan approval speed, nor about ranking interest rates among lenders, and while who funds a loan matters, priority specifically refers to the legal order of payment from proceeds, not the funding sequence.