Sunday, May 11, 2008

· A mortgage with a lien position subordinate to the first mortgage. That means if the borrower defaults and the house is foreclosed upon, the second-lien holder will be paid from what's left after the first-lien holder gets its money.

· A loan that could come in the form of a home-equity loan, with a fixed interest rate and set monthly payments.

· A loan that could also be a home-equity line of credit, in which the interest rate and the minimum payment can change regularly with market conditions.

· A type of loan that many homeowners used in place of a traditional down payment during the real estate boom.

· A type of loan that can hold up efforts to restructure a mortgage if a homeowner owes more on the combined loans than the house is now worth. The lender for the second mortgage may try to hold out for a greater percentage of what is owed.

· A type of loan that can also complicate a short sale -- a sale in which lenders agree to sell a house for less than they are owed to avoid the expense of foreclosure -- if the holder of the second mortgage doesn't cooperate.