Finance
What is a 'second mortgage' or 'junior lien' and how does it affect an Illinois property owner's risk?
AA mortgage that replaces the first mortgage at a lower rate
BA mortgage that is subordinate to the first mortgage; in foreclosure, the first mortgage is paid first, increasing risk for the second mortgage holder and borrower✓ Correct
CA government-assisted loan available only to first-time buyers
DA refinance that combines multiple loans into one
Explanation
A second mortgage is a loan secured by a property that is subordinate to the first (senior) mortgage. In Illinois, if a property goes to foreclosure, the proceeds are distributed in lien priority order—the first mortgage is paid first. If proceeds are insufficient, the second mortgage holder may not be fully paid. This priority risk is why second mortgages typically carry higher interest rates.
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