Re-subordination
Author: Rob K. Blake
Published: August 21, 2008
Re-subordination Defined
Re-subordination is when you leave an existing subordinate (ie. second and third mortgages) mortgage in place and refinance only the existing first mortgage. The refinance of the first mortgage will not be approved without a re-subordination agreement from the subordinate mortgage lender(s) agreeing to maintain it’s subordinate lien position(s). See Subordination for more.
The mortgage originator and/or title company has to provide the terms of the new first mortgage, your current credit profile, etc. to the existing second mortgage lender. They decide if they want to re-subordinate to a new first mortgage or not.
You may be wondering why a second mortgage lender would not re-subordinate to a new first. They agreed to it when you got the mortgage, right? It is all based on risk. If your credit, income, home value, etc. changed, they decide with this new information if it is more risky for them. If they view the risk too great, they do not agree to the re-subordination and you don’t get the new first mortgage without paying the second off.
Author: Rob K. Blake
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