How does a deed in lieu affect my 2nd mortgage or junior liens?

You would want to get a release of lien from the anyother lien holders attached to the home. This will allow you to bow out of your financial responsibilities. if they are not willing to do that then like the other lender stated they will issue deficiency judgement and then they will write the loss of as income earned which you will get a 1099 for the balance outstanding and have to pay taxes on it. Or they can flat out sue you for the balance! Neither way is pleasant and it usually will result in filing chaptyer 7 and or 13 to protect you from garnishment of income and or liquidation of any assets!