Advancing funds to a borrower that are secured by real estate previously pledged in a First Mortgage loan. In the case of Default, the first mortgage has priority of claim over the second.
A variation on the second mortgage is the home equity loan, in which the loan is secured by independent appraisal of the property value. A home equity loan may also be in the form of a line of credit, which may be drawn down on by using a check or even a credit card. See also Homeowner's Equity Account; Right of Rescission.
