Two simultaneous first mortgages on a property, one is foreclosing, what happens?

[Allan B.]

Consider this scenario:

1. Bob is purchasing a home, and starts applying for mortgages, and is shopping around.  Home purchase price is $500k.

2.  Two banks, namely Bank A and Bank B, offer him a first mortgage, each in the amount of $300k.

3.  Sneakily, Bob accepts both mortgages, and each bank is not aware of the other bank's mortgage.

4. Bob gets both mortgages, and uses $500k of the $600k received to purchase the home, and pockets the additional $100k.

5.  Bank A's mortgage contract date is 01/01/14, and recording date is 01/10/14.

6.  Bank B's mortgage contract date is 01/02/14, and recording date is 01/09/14 (earlier thank Bank's recording date).

What happens in this case?  Which lien gets priority?   Both banks did not receive adequate notice of each other's encumbrances.

Can Bank B foreclose on owner, claiming first priority, due to an earlier recording date (but later contract date)?