Which of the following describes junior loans?

Junior loans refer to loans that are subordinate to primary loans, or primary mortgages. This subordination means that in the event of default, if the borrower fails to repay the debt, the primary lender has the first claim on the property. Junior loans include second mortgages or home equity lines of credit, which are taken out in addition to the primary loan.

These types of loans are often used by homeowners to access additional financing without refinancing their primary loan. The risk associated with junior loans is higher for the lender because they are less likely to recover the full amount owed if the property is sold or foreclosed upon, as the primary loan must be satisfied first.

In contrast, the other options do not accurately describe junior loans. Loans backed by government entities refer more to programs like FHA or VA loans, not the subordinate nature of junior loans. Commercial development loans typically do not fall under the category of junior loans as they are often a different type of financing altogether. Lastly, loans specifically for the purchase of agricultural land would not encompass the broader definition of junior loans.