Modified Mortgage May Not Stand Up Against a Junior Mortgage
Probate and Property. March/April 2003, Volume 17, Number 2
By Harris Ominsky
Harris Ominsky is a partner in the law firm of Blank Rome Comisky & McCauley LLP in Philadelphia, Pennsylvania.
When a senior mortgage lender modifies the terms of its mortgage loan, it may impair its lien priority over a second mortgage. The recent case of Burney v. McLaughlin, 63 S.W.3d 223 (Mo. Ct. App. 2001), illustrates this peril and suggests that the senior lenders mustproceed with caution in modifying a first mortgage in any way that increases the risk or decreases the security of a second mortgage. This article discusses the potential pitfalls and recommends measures that the senior lenders can take to protect their position.