When a senior mortgage lender modifies the terms of its mortgage loan, it may impair its lien priority over a junior mortgage lender. This issue arose in a recent case decided by the Missouri Court of Appeals in Burney v. McLaughlin, 63 S.W. 3d 223, (Mo. App. SD 2001). In that case the court struggled with the general rule that any modification of a senior lien that increases the risk or decreases the security of a junior loan may cause the senior loan to lose its priority and be reduced to a subordinate position.
The Subordination
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