Sovereign Bank v. Gillis

The opinion of the court was delivered by

SABATINO, J.A.D.

This appeal concerns whether a refinancing lender that discharges its own previous mortgage and issues another mortgage loan for a higher amount, and which simultaneously pays off the balance owed on a junior lienor’s line of credit without having it closed, can rely upon equitable principles to maintain its priority *39over that junior Menor. This question of priority arises here in a context in which the borrowers, after obtaining the refinancing, drew additional funds on the line of credit and then defaulted on both the refinanced…