Legal Dictionary of Pakistan

second mortgage

A mortgage that is junior to a first mortgage on the same property, but that is senior to any later mortgage. "A landowner who already holds land subject to a mortgage may wish to hypothecate his equity. He does this by taking out a 'second mortgage.' Should the mortgagor default in his obligation on the first mortgage, the first mortgagee may foreclose. If there is a deficiency upon sale, the second mortgagee loses his security in the equity because there is no equity. If the mortgagee does not default on the first mortgage, but does on the second, the second mortgagee can foreclose on the mortgagor's equity. Such a foreclosure would not affect the first mortgagee's rights." Edward H. Rabin, Fundamentals of Modern Real Property Law 1087 (1974).