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What are the subordination requirements for a loan?

What are the subordination requirements for a loan?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

Subordination requirements vary by loan type and lender. For example, the subordination requirements for a mortgage are different than the requirements for a car loan. The best way to determine the subordination requirements for a given loan, including a mortgage, is to contact the servicer for the loan. The servicer is the company to which you make your loan payment.  

Please note that virtually all mortgages require lender approval to subordinate the loan and lenders are unlikely to agree to subordination unless extraordinary circumstance are involved. Lenders almost always decline subordination requests because subordinating a mortgage means another loan or debt is repaid in full before the mortgage is repaid.  Subordinating a mortgage exposes the lender to more risk so they are usually unwilling to agree to it unless the lender also owns the loan that would be senior to the mortgage or the lender receives a financial inducement such as a fee.

Please note that loan subordination requirements are specific to each lender and do not apply to other lenders or different types of loans.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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