This is a great follow-up to my post last night about Hamp. I must say I was unaware of the details behind the mechanics of these programs, which to me, are stunning. Like this:
Because the borrower is paying the Hamp-modified first lien amount, and the full second lien amount, the second lien effectively becomes senior to the first. In fact, second lien lenders might even be thought of as benefiting from the first lien mortgage since they have a better chance of getting more of their money back from the borrower.
Seconds senior to firsts? Stunning.