A borrower defaults on their mortgages and enters foreclosure. They have two mortgages on the house:

First mortgage: outstanding loan balance is $150,000

Second mortgage: outstanding loan balance is $25,000

The house is sold for $145,000. How much can each lender receive?

A. First lender receives $150,000; second lender receives $25,000

B. First lender receives $120,000; second lender receives $25,000

C. First lender receives $135,000; second lender receives $10,000

D. First lender receives $145,000; second lender receives $0