In one sentence
A single loan split into a senior A-note and a subordinate B-note, allocating risk and return between lenders holding different pieces.
The longer version
Splitting a loan into an A-note (senior, lower risk and yield) and a B-note (subordinate, higher risk and yield) lets lenders tranche a single mortgage. An intercreditor agreement governs payment priority and control between the note holders.
The structure appears in larger deals and securitizations, and it turns one loan into a multi-party relationship the closing and servicing must track.
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