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Letter of Subordination

Discussion in 'Loan Modification' started by Jerem, May 22, 2012.

  1. Jerem

    Jerem LoanSafe Member

    Hi All,

    IM currently going through a loan modification and my HPS told me the other day that I need to get a letter of
    subordination from the second mortgage in order for the first to finalize the loan modification.

    This is something un heard off to me, if this is something new the servicers are asking for how do I go about requesting or even approaching the second lender about signing this letter.

    I'm behind on payments on the second for like 10 months and dont know if they will be willing to sign such a thing, they will more likely ask me to repay what I owe.

    Please advise.
  2. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    I do not see why a subordination letter would be requested to finalize the modification.. Who is assisting you with the mod and communicating with your servicer?
  3. Jerem

    Jerem LoanSafe Member

    this is what I was told by the HPS who also mentioned about liens on the title which makes no sense since this is not a refi nor a new loan but only a loan modification. it is my understanding that a subordination letter would be required for a new loan or a refi not a loan modification which does not get recorded.
  4. Jerem

    Jerem LoanSafe Member

    Evan thanks for your reply, I forgot to mention that I'm the one negotiating and communicating with the servicer but was shocked when they asked for this document now so far into the loan mod.
  5. davephx

    davephx LoanSafe Member

    Back in about 2009 there was a subordination required but usually done behind the scenes. A HAMP directive eliminated that requirement years ago. May be just an excuse by the bank to try and foreclose.

    Since a "modification" is NOT a new loan, it remains in 1st position. If it was a new loan since recorded after the 2nd it may then become the 2nd and need subordination. But not a modified loan as I understand it.

    This again was an issue years ago but have not heard it raised since.
  6. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    I definitely agree with Dave on this, I do not see why they would be requesting such an agreement but the person you have spoken with may have not been well informed or was confused with what they were requesting from yourself.. A subordination agreement should not be needed to finalize a modification..
  7. Cat Damiano

    Cat Damiano Mortgage Wars

    Is this a HAMP modification on a loan that is not backed by either Fannie Mae or Freddie Mac, which may be different, because if it is, it may be a requirement of the investor on the loan asking for the subordination agreement in order to modify.

    According to the HAMP guidelines for non GSE loans;

    First Lien Position

    For all mortgage loans that are modified under HAMP, the servicer will follow investor guidance to
    ensure that the modified mortgage loan retains its first lien position and is fully enforceable. The
    servicer must work with the borrower to obtain approvals, including subordination agreements, if
    required by investor guidance.
    Servicers should extend the TPP as necessary to accommodate
    delays in obtaining approvals, but they are not required to extend the TPP beyond two months,
    resulting in a total five-month TPP. In the event of a TPP extension, the borrower shall make a
    TPP payment for each month of the TPP including any extension month.
  8. Big Irv

    Big Irv LoanSafe Member

    Hey guys,
    I'm in the same boat too. Made my 3rd TTP on May 1st. Technically I'm supposed to be towards the very end of my HAMP trial period and yesterday my HPS from WFHM called me to let me know that they are going to need a "subordination certificate" from Bank of America which I have a HELOC with as my 2nd. Haven't paid them a dime in about 17 months. Want to take care of the 1st with Wells so I know that I have a roof over my head to begin with. Then I plan on settling with BofA for a much smaller percentage as I have seen here that it can be done. Cat, my loan is owned by Freddie Mac and serviced by WFHM. Does this request jive with the HAMP guidelines? Will it be next to impossible to get the agreement from BofA if I'm 17 months behind?
  9. Jerem

    Jerem LoanSafe Member

    big Irv I'm on the same boat with you here. I just hope this is not an excuse by the servicer to deny the loan mod.
  10. Monserrat

    Monserrat LoanSafe Member

    Hello Friends,
    Bad news ... Wells Fargo is now requiring Subordination Letter from all Second Liens. I have just been through my Trial Payments and now I was told to get this as all of the sudden the Title showed a second lien...! I said why didn't anyone tell me that I would need this prior to my TPP? You did know that I had a second mortgage from my Hamp App and Financial worksheet.!... blabla bla bla... Then I realized what am I doing? These jerks@##%^^&^^$$$$%$!!!!! Any case I called my Attorney who closed on the Property and the oringal Lender and they agreed that a MODIFICATION changing the payment terms and extension does require recording... and foremost should the 1st not ask for the subordination they can lose their priority status if the second can contest it! Also my Loan is a Freddie Mac and I found their Subordination Agreement for Modifications here www.freddiemac.com/uniform/doc/subordination_agt_mod_form_3748.doc
    I filled it out with my own information and fax it to WF ... they can't even tell me if this is the format that they need... I wanted to make sure that they "approve" it before wasting my time getting it approve by my 2nd which is still not a sure thing! Today NYCB (Ohio Savings Bank) just said they may reconsider once they see what is says... GOD only knows...
  11. Cat Damiano

    Cat Damiano Mortgage Wars

    Hi Monserrat,

    Unfortunately that is the case, but you are correct in the fact that they should have alerted you to this. I am sorry they didn't and that you are having to go through this hoop jumping in order to get your permanent modification. Please keep us posted on your progress. I do hope that they second will re-subordinate so that your modification can become permanent.

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