If a client contacts CCB and requests that CCB subordinate our existing second mortgage to their proposed new mortgage loan so that it can be a first lien, do the following:
Step 1: Request Information
- Provide the Subordination Request Form to the client, escrow agent or the lender requesting our subordination.
- Form must be completed by the proposed lender, and certified as to the accuracy of the information provided.
- The $150 processing fee assessed by CCB must be received at this time.
- Credit GL: Branch #- 460220- Cost Center-000
- All information and documentation requested on the request form must be submitted to the loan officer of record and reviewed for acceptability.
Step 2: Review Information
- Loan officer of record must evaluate and document review of the request. You can utilize the Documenting Subordination Request Review Form (Subordination Review Form) for guidance.
- Items to be addressed include:
- LTV
- Under no circumstance will CCB subordinate to additional funds added to the first mortgage balance if the LTV exceeds acceptable requirements.
- Closing costs borrower incurs to refinance the first liens may not be financed in the loan ahead of our lien if the LTV exceeds requirements.
- The lender may require a reduction of a HELOC to bring the new LTV into acceptable standards.
- Updated valuation
- Approval
- LTV
- Credit Administration must be contacted for any approvals needed above a lender's authority.
- Credit Administration must concur with any request to subordinate to an interest-only loan or one with negative amortization.
Step 3: Complete the Subordination
- Prepare the Agreement to Subordinate and Notice of Waiver or the Agreement to Subordinate - Closed End form.
- Provide the Agreement to the client, escrow agent or the lender requesting the subordination.
- The Agreement must be executed by our client in the presence of a notary and notarized.
Step 4: Document the File
- All documentation used in making the decision to subordinate should be sent to _LoanSvc- Records.
- Including the Documenting Subordination Request Review Form, if used.
- Signed copy of the Request to Subordinate
- Signed copy of the Agreement to Subordinate
Things to remember:
- Any reference to mortgage will be used interchangeable with Security Deed
- Any subordination request on a loan carrying United Guaranty Insurance or Phoenix Underwriters Insurance must be approved through Central Underwriting.
- To determine whether the loan is insured by UG or PU, go to the Escrow/Insurance menu. You will see either on the list of items tracked if the loan is insured.
- Any increase in LTV above policy may require Insurance per Home Equity Underwriting Guidelines and should be deferred to Central Underwriting.
Reduce Line, if necessary
If a reduction to a HELOC is necessary:
- Document the fact that it was requested by the borrower. We cannot arbitrarily reduce a line of credit to a consumer without a signed modification to evidence the consumer's consent.
- Use the appropriate text in the Agreement to Subordinate and Notice of Waiver.
- There must be a separate modification and reduction of the Credit Line Agreement for the existing HELOC obtained through Loan Doc Prep.