Residential lenders funded $124 billion in second liens in 2008, a startling — but not unexpected — decline of 70% from the prior year, according to new figures compiled by National Mortgage News and the Quarterly Data Report  QDR).

In 2006, nationwide second lien production peaked at $491 billion, the newspaper found. Up until early 2008 the second lien market continued strong, in part because of "80-10-10" or "piggyback" loan structures where lenders offered both a first and second lien to home buyers; the combination of loans had the effect of increasing the loan-to-value ratio to 80% while allowing the borrower to put only 10% down, and thus allowing them to avoid paying private mortgage insurance.

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