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NeighborWorks® Sacramento’s lending and subordination practices assist low- to moderate-income households achieve financial independence, build wealth through homeownership, and protect their home asset over time. This purpose influences our subordination policy.
A subordination occurs when a homeowner has more than one mortgage loan secured by their property, and the homeowner refinances. If that homeowner has a down payment assistance (DPA) loan with NeighborWorks® the refinancing lender will most likely require that we agree that the DPA loan will have the same lien position for the refinanced mortgage as it did for the original mortgage. This process is called subordination.
When reviewing a subordination request, we assess the new loan terms according to their benefit to the borrower. For a request to be approved, it must clear these thresholds:
1. Net Tangible Savings Test
Savings must recapture the closing costs for the refinance within 24 months
These savings do not include:
Pre-payment and/or deferral of monthly payments
Reimbursement of funds in an existing impound account
2. Loan to Value
CLTV must be greater than or equal to 75%
In addition to these thresholds, NeighborWorks® Sacramento will not consider requests for subordination for these reasons:
To receive cash from equity in the property (cash out refinance)
To pay-off loans junior to a NeighborWorks® Sacramento loan or other debt secured by the property
For a NeighborWorks® Sacramento amortized loan
To pay property taxes, utilities, or assessments
To pay-off revolving, automotive, or other consumer debt
After reviewing our subordination requirements and determine the new loan terms meet NeighborWorks® Sacramento’s guidelines, follow these steps to submit your subordination request:
Pay the $400 fee online here. Please note this fee is non-refundable
Submit your complete subordination packet AND tracking number via email to firstname.lastname@example.org Once you have submitted your packet, a confirmation email will be sent. If no documents are missing at the time of submission, our team will turn-around the request within 14 business days.
If there are documents missing from the request packet, we will reach out to retrieve the missing documents. Our team will turn-around the request within 14 business day of the date the final documents were received.
If approved, our team will email a copy of the subordination to the lender for review.
Frequently Asked Questions (FAQs)
When a home is used as collateral for a loan, the lender places a lien on the property by recording a document known as a mortgage, deed of trust, or security deed. If there is more than one lien on a property at the same time, the priority of these liens is typically determined by the order in which the lien documents were recorded.
When a borrower refinances a first lien mortgage and there are junior liens secured by the property, there financing lender will likely require the junior lienholders to agree that the new mortgage will have senior lien priority over the junior liens, just like the first mortgage being refinanced does. When junior lienholders agree to remain in lower priority lien positions, they are subordinating their liens to the lien for the new first mortgage. Ultimately, the junior lienholders will have the same lien priority they did before the refinance. To subordinate a lien, a subordination agreement document is executed and recorded.
Ask your lender to go to our website and review our subordination policy before submitting a complete packet and charging you a fee.
NeighborWorks® Sacramento has a 14-business day turn-around. We strive to complete all subordination requests within this timeframe. This is contingent upon receipt of all required documentation. Your lender will receive instructions regarding needed documentation, questions, etc.
Yes, NeighborWorks® Sacramento will charge you a fee of $400 ($250 for the review of your subordination request and $150 for the subordination agreement). The fee must be paid at time of submission and is Non-Refundable. Your lender should discuss fee payment options with you and review our policy prior to submission.
Your lender will enter the request via email, Efax, FedEx, UPS or Courier services.
Your lender will receive a confirmation email when a request and fee have been received. If the submission is complete and No additional documents are needed our team will begin reviewing your request. Per our policy we have 14-business days to review and respond to your request. If your lender submits an incomplete packet and additional documents are needed our team will reach out to your lender requesting the missing documents. Review of your request does not happen until a complete packet and fee are received. We encourage you to speak with your lender for any additional updates.
NeighborWorks® Sacramento understands the importance of saving you money on your loan and our team works hard to assist you and your team with the submission process.