What distinguishes a secret second mortgage?

A secret second mortgage is characterized by being concealed from the primary lender. This type of mortgage typically involves additional borrowing against a property that the primary mortgage holder is not aware of. Borrowers may choose to take out a secret second mortgage to access additional funds without informing their primary lender, which might have implications for loan agreements and risk assessments.

The other choices do not accurately define a secret second mortgage. For instance, full disclosure to all parties involved and legal documentation are essential components for typical mortgage transactions, but a secret second mortgage specifically opposes these principles. Moreover, identifying it as a personal loan does not capture the essence of the secretive nature of the arrangement. Instead, the key characteristic lies in its secrecy relative to the primary mortgage.