Article: Mortgage Subordination Agreements: Some Compelling Reasons to Reconsider a Lean Agreement
10/1/2007 Nicholas P. Scavone, Jr.
The legal landscape of mortgage priority, foreclosure and subordination is complex and often unintuitive. In this environment, there are compelling reasons for both a senior mortgagee and junior mortgagee to have a comprehensive mortgage subordination agreement that addresses a panoply of issues, some particular to Michigan law and others related to subordination agree-ments generally. Yet lawyers and lenders too often use a short mortgage subordination agreement that merely provides for the subordination of one mortgage to another without more, or a mere consent letter from the senior mortgagee, or no agreement at all when a junior mortgage is taken that will remain junior in priority. As this article will explain, such practices can lead to unanticipated and sometimes serious consequences for both lenders.
