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.
