Small Block

Capital Deployment Risk · Debt, by priority (most senior first)

Secured First-Mortgage Liens and Senior Secured Lenders

Definition

A lender whose loan is backed by a first-priority mortgage or deed of trust on real property, giving it the first right to the property's value on default. In bankruptcy, its claim is a secured claim up to the value of its interest in the collateral and an unsecured claim for any shortfall[1].

Federal law

A market and contract term. No Act of Congress defines it; the federal laws below apply as described.

  1. Bankruptcy Reform Act of 1978, Pub. L. 95-598, § 101 (enacting 11 U.S.C. § 506), 92 Stat. 2549. Determines the secured and unsecured portions of a lien holder's claim based on collateral value (11 U.S.C. § 506(a)). Official text: govinfo.gov, U.S. Government Publishing Office.