What does it mean to subordinate the second mortgage? Are banks likely to do that?

Great question-Subordination of the second lien is simply a fancy way of stating that the second lien will stay in second position behind a first mortgage without any changes to the terms of the loan. The reason you have to subordinate the second lien is because when you pay off the first lien holder then the second lien automatically drops into first lien position. In order to put them back into second lien position a subordination agreement has to be implemented by the second lien holder. Most banks are willing to do this if it makes financial sense and their interest in the collateral is secured. Every bank has a different opinion on this subject so it is best to find out directly from your secondary lien holder on how they treat subordiantions. If your loan officer told you need to do this then there must be a reason- most likely it has to do with value and the second lien not fitting into the loan parameters of what you are trying to do. The subordination process only lengthens the time it takes to close the transaction so ultimatley it is a last resort or worst case scenario for the loan officer to suggest this method.