Two loans on one home?

[James W.]

Hi,

We all know homes at auctions many times have more than one mortgage. 

Can someone explain to me how does an owner get two mortgages on the same house?

I can imagine the HELOC. But Is there any other way how the owner landed up in two loans?

For example can owner take two mortgages at the time of financing a home purchase?

Or, taking a second mortgage a few years later, like refinancing, but paying only part of the first, so carrying two mortgages?

[Brian Ploszay]

2nd mortgages were probably way more common before the crash.  The first mortgage has the first lien and therefore has a very high chance of getting repaid.   Second position loans wanted the higher rate of return.    In theory, you can take on many mortgages, but they can never have the same position in the event of a default.