Or (3), there is so much equity in the share of the owner seeking the loan that the preexisting mortgage is not a terrible risk for the lender. I've seen instances of that in the many title searches I did while a revenue officer for the IRS.In other words, an institutional lender would never grant a loan secured by a lien on real property unless:
(1) All then existing record owners are signatory to the mortgage agreement and note. Or,
(2) Those owners of record not on the mortgage documents have somehow subordinated all of their right, title and interest in the property (including waiving rights of homestead) to those of the mortgagee.