What is the process called when a second lien retains its position after refinancing the first lien?

The process where a second lien maintains its priority position after the refinancing of a first lien is known as subordination. In this context, subordination refers to the agreement where the second mortgage lender agrees that their lien will remain in a secondary position, even when the first mortgage lien is refinanced. This is crucial for ensuring that the second lender's interests are not jeopardized by the refinancing process.

When a borrower refinances, they are often looking to take advantage of lower interest rates or better loan terms. If the second mortgage is not subordinated, it risks losing its position if the first mortgage is paid off or altered, which could significantly affect the second lender's ability to recover funds in case of default. Subordination helps to protect the interests of the second lienholder by providing them assurance that their claim on the property remains valid despite changes to the first lien.

Other processes such as foreclosure deal with the lender's ability to reclaim a property when the borrower fails to make payments, and loan modification involves changing the terms of an existing loan rather than changing the lien's priority. Re-subordination specifically refers to establishing a new subordination agreement following the refinance; however, the primary term for the overall process described in the question is simply subordination.