A Georgia Subordination Agreement Subordinating Existing Mortgage to New Mortgage is a legal document that establishes the priority of two mortgages on the same property. In certain cases, a homeowner might need to secure a new mortgage while still having an existing mortgage. However, the new lender may require the existing mortgage to take a subordinate position to the new one in terms of repayment priority. This agreement helps the new lender feel more secure in extending credit, as it ensures that in the event of foreclosure or sale, the new mortgage will have priority over the existing one. By signing this agreement, the borrower agrees to subordinate the existing mortgage to the new mortgage, granting the new lender first lien status. In Georgia, there are two main types of subordination agreements subordinating existing mortgages to new mortgages: 1. Voluntary Subordination Agreement: This type of subordination agreement is entered into willingly by the borrower, typically to facilitate refinancing or obtaining a home equity loan. The borrower voluntarily agrees to subordinate the existing mortgage to the new one, primarily to benefit from a lower interest rate or gain access to additional funds. 2. Agreement Required by New Lender: In some cases, the new lender may require the existing mortgage to be subordinated as a condition for approving the new mortgage. If a borrower seeks to secure a secondary mortgage, the lender may demand subordination to protect their investment. This type of subordination agreement is often used in commercial real estate transactions or when a homeowner is taking out a second mortgage. Key provisions within a Georgia Subordination Agreement Subordinating Existing Mortgage to New Mortgage may include: 1. Parties involved: Names and contact information of the borrower, new lender, and the lender holding the existing mortgage. 2. Property information: Details regarding the property securing both mortgages, including its legal description and address. 3. Loan details: Clear identification of the existing mortgage and the new mortgage, such as loan amount, interest rate, and term. 4. Subordination clause: A clause explicitly stating that the existing mortgage holder agrees to subordinate their lien to the new mortgage, making it superior in priority. 5. Consent of existing lender: A provision where the existing lender consents to the subordination and affirms their willingness to release the first lien position. 6. Conditions and remedies: Language outlining the conditions that trigger the subordination, as well as any potential remedies in case of default by the borrower. 7. Effective date and execution: Date of the agreement's execution and signatures of all parties involved, including notarization where required. It is important to note that each subordination agreement can vary depending on the specific terms negotiated between the parties involved. Seeking legal advice, especially from a qualified real estate attorney, is highly recommended ensuring compliance with Georgia laws and protect all parties' interests.
Georgia Subordination Agreement Subordinating Existing Mortgage to New Mortgage
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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.
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.
A subordinated loan agreement (SLA) must be filed with NFA at least ten days prior to the proposed effective date of the agreement.
Subordination agreements are used to legally establish the order in which debts are to be repaid in the event of a foreclosure or bankruptcy. In return for the agreement, the lender with the subordinated debt will be compensated in some manner for the additional risk.
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.
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.
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.