My daughter and son-in-law owe us money (about 8 grand in all) and are not good at paying it back. I do not want to do a lien on their house, I would like to keep the courts out of this. Can I do a second mortgage with me holding it, that way we will get our money someday and I don't have to keep hounding them? And if I can, how do I get that done?

A second mortgage is a lien on the property. It is second in priority to whatever mortgage currently exists. Your daughter would not be able to sell or refinance the property without paying you the full amount she owes you.

If you want to go ahead with this you would have to prepare a mortgage and have it signed by your daughter and son-in-law and then have it recorded in the county clerk's office. If your daughter is willing to do it then I suggest that you have the documents prepared by a real estate attorney in your area to make sure that the paperwork is done right.