A first mortgage is the first (top priority) lien on a property, a second mortgage is a lien on the property that is subordinate to a first mortgage. In the event of a sale or foreclosure, the first mortgage is paid off in full before the second mortgage gets a penny. Because of the subordinate nature of a second mortgage, they frequently carry higher interest rates than first mortgages to reflect that subordinate risk.

The First takes precendence over the Second in the event of a default. The property would be sold and the proceeds pay off the senior bond and then the junior bond