Request Loan Subordination

The City's Loan subordination program benefits community households or organizations that are recipients of Salem-issued HOME, CDBG, or Public Works funds.

You can apply for a loan subordination to change the priority of loan repayment. Priority is usually determined by the recording date of the loan. A subordination agreement allows a debt holder with higher priority to move to a lower position in the repayment order.

​Required documentation

When requesting a loan subordination, you will need the following items:

  • A formal written request from the lender or title company outlining the following:
    • Loan terms (including the new loan amount)
    • Who is paid out of escrow (if applicable)
    • Pre and post total monthly payment
    • Lender’s name and contact information
    • Instructions on the return of the executed subordination agreement
  • Copy of appraisal or real estate valuation
  • Current preliminary title report
  • Current loan estimate signed by the applicant
  • Copy of the 1003 application with current information signed by the applicant
  • Statement from client including:
    • Authority for the City of Salem to provide loan information to lending or title company
    • Original signature - faxes accepted when originals follow
  • A non-refundable $500 fee per loan to review the subordination (checks payable to City of Salem, credit cards and cash are not accepted).

Process

After receiving all required documentation, expect a minimum of 21 business days for the review process.

Subordinations may be approved if the following conditions exist:

  • Rate and term refinance with no cash out and/or additional debt added to the first mortgage loan, regardless of loan to value (LTV)
  • Total LTV is at/or below 80%
  • New loan doesn't exceed a 30-year term
  • Interest rate is fixed

Subordinations will not be approved if the following conditions exists:

  • The subject property is being used as an investment property. Property must be the primary residence of the borrower
  • The City currently holds the first lien position

If you are requesting an exception to this policy, please include a statement of explanation. Lenders may want to discuss the request with their clients prior to submitting documentation. The City will complete a Subordination Agreement. Original recorded agreements are to be returned to the City of Salem.

​Applicable document

  
  
  
Statement of Authority Loan Subordination104 KB statement-of-authority-loan-subordination.pdf

Contact us

Shelly EhengerFederal Programs ManagerUrban Development Department
Monday–Friday
8:00 a.m.–5:00 p.m.
Mailing address:
350 Commercial ST NE
Salem OR 97301
Phone: 
TTY/TDD: