This agreement allows one lien holder to subordinate its deed of trust to the lien of another lien holder. For valuable consideration, a particular deed of trust will at all times be prior and superior to the subordinate lien.
Kentucky Subordination Agreement of Deed of Trust
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Multi-State
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US-00185
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Word;
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How to fill out Subordination Agreement Of Deed Of Trust?
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FAQ
A Subordination Agreement focuses on creditor priorities and security claims, providing legal certainty to creditors when assessing repayment risk. If a credit event (or default) occurs, a subordination agreement provides a senior lender superior repayment rights than the subordinated lender.
An example is a trust document that includes a subordinate clause. This requires it to state that once the primary lien becomes active, a secondary lien becomes automatically subordinate. For instance, if a trust pays education funding as a first priority, the first lien is tuition.
It states that any other loans or liens on the property take a second lien position. Most first mortgage lenders won't fund a loan unless there is a subordination clause giving them first lien position. Typically, the subordination clause is only necessary when you refinance your mortgage.
A subordination clause is a clause in an agreement that states that the current claim on any debts will take priority over any other claims formed in other agreements made in the future.
Who Benefits from a Subordination Clause? A subordination clause is meant to protect the interests of the primary lender. A primary mortgage usually covers the cost of purchasing the home; however, if there is a secondary mortgage, the clause ensures that the primary lender retains the number one priority.
Despite its technical-sounding name, the subordination agreement has one simple purpose. It assigns your new mortgage to first lien position, making it possible to refinance with a home equity loan or line of credit. Signing your agreement is a positive step forward in your refinancing journey.
The new lender prepares the subordination agreement in conjunction with the subordinating lienholder. Then the parties typically sign the agreement. But in some cases, just the subordinating lender will need to sign the paperwork.
A subordination agreement must be signed and acknowledged by a notary and recorded in the official records of the county to be enforceable.