Home prices are up so what does this mean for Junior Liens?

Home prices are on the rise as written in this Washington Post article. What does this mean for the junior lien holder   Well we spend a lot of time thinking and talking about risk and how to avoid it.  But what about best case scenarios?  A best case scenario for a junior lien holder is a home refinance in which we get paid in full.   We don’t like to dwell on this best case but it’s worth noting.

As home prices rise, underwater homes become not underwater homes when the value of the property exceeds the amount of the loans.  This enables borrowers, who are often in a better credit position then they were a few years ago, to refinance. And to the junior lien holders pleasure a full payoff of the note is received.