A West Virginia Subordination Agreement Subordinating Existing Mortgage to New Mortgage is a legal document executed when there is a need to establish priority between two mortgage loans on a property. This agreement allows the borrower to create a new mortgage on the same property while subordinating the existing mortgage to the new one. By subordinating the existing mortgage, the lender of the new mortgage gains priority in terms of repayment. In West Virginia, there are two commonly used types of subordination agreements relating to existing mortgages being subordinate to new mortgages. These types are: 1. Commercial Subordination Agreement: This type of subordination agreement is typically used in commercial real estate transactions. It involves subordinating an existing mortgage, which may have been used to finance the property's purchase or improvement, to a new mortgage that may be obtained for additional financing. Commercial subordination agreements in West Virginia are essential for potential lenders to secure their position and ensure repayment preference. 2. Residential Subordination Agreement: This type of subordination agreement is relevant in residential real estate transactions. Homeowners who want to obtain a new mortgage, such as a home equity loan or refinancing, but have an existing mortgage in place, may need to execute a residential subordination agreement. By doing so, the homeowner ensures that the new mortgage lender has priority over the existing mortgage lender. Both types of subordination agreements in West Virginia serve the purpose of establishing a clear order of payment priority between lenders. They protect the rights of the new lender and ensure that they have the first claim to any amounts recovered from the property in the event of default or foreclosure. It's crucial to note that executing a subordination agreement requires the consent of the lender holding the existing mortgage. Typically, the lender will review the terms of the new mortgage, analyze the borrower's creditworthiness, and evaluate the property's value to assess the potential impact on their interests before granting consent. In conclusion, a West Virginia Subordination Agreement Subordinating Existing Mortgage to New Mortgage is a legal document used to establish priority between two mortgages. It ensures that the lender of the new mortgage has first claim to repayment over the existing mortgage lender. The two main types of such agreements in West Virginia are Commercial Subordination Agreement and Residential Subordination Agreement. These agreements are crucial in securing financing and providing protection to lenders in real estate transactions.
West Virginia Subordination Agreement Subordinating Existing Mortgage to New Mortgage
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FAQ
A subordinated loan agreement (SLA) must be filed with NFA at least ten days prior to the proposed effective date of the agreement.
Getting A Second Mortgage A second mortgage will become a subordinate loan. If you repay the primary loan within the term of the second mortgage, the second mortgage can take its place as the primary loan.
Many people have a subordinate mortgage in the form of a home equity line of credit or home equity loan. A subordinate mortgage is secured by your property but sits in second position, if you have a primary mortgage, for getting paid in the event you default.
The order of subordination is determined based on the type of loan against your property. If you only have one home mortgage and no other liens, you'll find that mortgage subordination won't come into play until you have more than one lien on your home.
Again, if you're refinancing your first mortgage and the property also has a subordinate mortgage, the refinancing lender will usually handle the process of getting the necessary subordination agreement. But you need to ensure that the required subordination agreement is completed before the new loan's closing date.
A subordination agreement prioritizes debts, ranking one behind another for purposes of collecting repayment from a debtor in the event of foreclosure or bankruptcy. A second-in-line creditor collects only when and if the priority creditor has been fully paid.
8) Keep the original signed subordination agreement in your file to be given to your title agent to record AT THE SAME TIME they record the RIM easement. Do not record the mortgage subordination agreement ahead of easement recording.