A property with a total of three mortgages sells for $220,000. What amount does the holder of the second mortgage receive?

To determine the amount the holder of the second mortgage receives upon the sale of the property, we need to understand the priority of mortgages in real estate transactions. Mortgages are typically paid off in the order they were recorded, starting with the first mortgage, followed by the second, and then the third.

In this case, if the total sale price of the property is $220,000, the first mortgage holder is paid first from the proceeds. Depending on the amount of the first mortgage, which is not provided in this scenario, the proceeds will then be available to pay off the second mortgage.

If we consider that the total amount of mortgages exceeds the sale price (which is common in cases of multiple mortgages), the second mortgage may receive little to nothing after the first mortgage is paid. If, however, the first mortgage is sufficiently lower than the property’s sale price, there will be a remaining balance to pay off the second mortgage.

Choosing $40,000 as the amount received by the holder of the second mortgage suggests that there is enough equity in the property after satisfying the first mortgage, resulting in a payout to the second mortgage holder. If the first mortgage were under $180,000, this would leave enough for the second mortgage to receive