A mortgage which is given status as a maritime lien is called a “preferred mortgage.” In the event of default, it enjoys a certain priority. Additionally, the Coast Guard is prohibited from making certain changes in the documentation. These changes include, but are not limited to, changing the vessel name, ownership, and hailing port without the mortgagee’s consent. For this reason, many financial institutes require documentation eligible vessels to both be documented and to have preferred mortgages recorded against them.
How Does a Preferred Mortgage Work?
