U.S. Mortgage Index

Subordinate lien

Definition

A subordinate lien is a junior claim on the property that stands behind a first lien. A second mortgage is one common form. A HELOC or assistance silent second can also be subordinate. The term is broader than second mortgage.

In plain English

If another loan or assistance note is also secured by the house, that later claim is usually subordinate. It gets paid after the first lien in a sale or refinance that requires payoff of senior debt. A second mortgage is the familiar closed-end example. Not every subordinate lien is a second mortgage.

Technical definition

CFPB’s key-terms heading for a second mortgage or junior lien is PRIMARY. The security-interest page is supporting context.

Why it matters

Down-payment assistance and piggyback loans create junior claims that are not always labeled second mortgages.

Sources reviewed

Important note

A subordinate lien is not always a closed-end second mortgage.