(1) A second mortgage placed on a home, usually in favor of the seller, so that a purchaser can buy the home even without a sufficient down payment.They are called silent because the first lender does not know about the second mortgage and might not have approved the first mortgage if it had known the borrower did not have enough money for a down payment.(2) Shared equity second mortgage programs offered by some state housing assistance authorities.The housing authority loans money to a qualifying moderate-income home purchaser, with repayment due only when the home is sold or refinanced. This is called the silent second, meaning an invisible second mortgage. The housing authority then shares in the profits due to the increase in value. Sometimes there are restrictions requiring sale only to another qualifying moderate-income home buyer.
A second mortgage offered at preferential (subsidized) terms to those who qualify.
For example, a labor union may offer members who are first-time home buyers a silent second to finance closing costs or the down payment. The second might bear no interest and might not be repayable until the first mortgage is repaid or the property is sold.