The senior lien holder cares about the junior lien holders because the mere presence of a junior lien (obviously) raises the odds of default; there’s more debt to service, after all. And while the senior lien holder’s position has more protection, servicing these loans becomes much more expensive as defaults and foreclosures rise.
Think of it this way. As a bank, holding interest rates constant, would you rather hold a portfolio of 70% LTV mortgages with practically zero odds of default OR would you rather hold a portfolio of 70% LTV mortgages all with 20% juniors behind them (for a CLTV of 90%)? Clearly the latter portfolio is more risky and more expensive. Yes, you’ll likely get your principal back, but it’s going to be more expensive from an operating standpoint (servicing, legal, etc.).
Holding the interest rate steady, you’d always rather have a lower risk of default, even if you feel your principal is protected. The mortgage business has very thin profit margins. Add in a lot of additional servicing on an additional 5% of your portfolio and an otherwise good portfolio turns bad pretty quickly even if your principal is protected.
