Question: Bob is the mortgagee in a mortgage recorded on 1/31/1996 on the property at 1000 North Main Street in the amount of $7,500,000. Sue has a mortgage on the property for $1,000,000, recorded on 2/28/1998. Piet has a third mortgage for $500,000, recorded on 3/31/2000. The property sells in foreclosure for $9,000,000, and there are $1,000,000 in costs to third parties.
a. How much does each lien holder receive?
b. Which of the three lien holders is most likely to bring the foreclosure suit, and why?
c. How do your answers to (a) and (b) change if Sue's mortgage has a subordination clause in it and Piet's does not?