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Author: foo1bar Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 125003  
Subject: Re: Mortgage interest deduction Date: 4/10/2013 2:36 PM
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(2) the first mortgage/deed of trust prohibits subordinate liens and recording would trigger a default.

I readily admit that I've only seen a few loans (my own) - but I've never heard of a mortgage that prohibits subordinate liens.
So that doesn't seem likely to me.

The reasons I would guess:
1> it can become an extra obstacle if after it's recorded the owner wants to refinances the 1st.
2> It costs some small amount to record it - (I think in my county it's $20 or $40 or something)
3> the income being received from interest on the loan isn't being documented for IRS, and they're avoiding documenting anything so that it's less visible to the IRS. (hopefully that's not true)
4> didn't want to spend the hour or two dealing with it.
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