Real
Estate Finance Notes
This
class is dealing with issues of priority.
Mortgages may be “replaced”.
The
rule is that you lose priority only to the extent of material prejudice. Extensions of time are generally not
materially prejudicial. Increases in interest
rate or principal can amount to material prejudice.
Subrogation
is appropriate to prevent unjust enrichment if the person seeking subrogation
performs the obligation in full upon request from the obligor and reasonably
expected to receive a security interest in the real estate with the priority of
the mortgage being discharged and if subrogation will not materially prejudice
the holders of intervening interests in the real estate.