What is Subordinate (Second) Lienholder?
A subordinate or second lienholder is any lender or creditor with a claim on the property that sits behind the first mortgage — such as a home equity loan, HELOC, or judgment lien. In a short sale, every lienholder must agree to release its lien, and second lienholders often negotiate hard because they may receive little. Getting all liens released is frequently the toughest part of a short sale.
Example: A home with a first mortgage and a HELOC requires both the first lender and the second lienholder to approve the short sale; the second agrees to release its lien for a small partial payment.