Subordination Guidelines
An NFC Advantage Loan typically includes a primary mortgage paired with one or more subordinate loans. These subordinate loans may affect a borrower’s ability to refinance or obtain additional mortgage financing after closing.
If an NFC borrower applies for refinancing or a new second mortgage, the new lender may ask NFC to subordinate one or more of its liens. Subordination requests are evaluated according to NFC’s established policies and are not automatically approved.
When NFC May Approve Subordination
NFC may consider subordinating its lien under the following circumstances:
- Rate-and-term refinance with no cash out or debt consolidation.
- Home improvement financing, including a home improvement loan or refinancing in which the cash-out funds will be used for documented home improvements.
- Troubled loan or borrower hardship, such as divorce, job loss, illness, chronic delinquency, foreclosure or the threat of foreclosure.
- Borrower equity available at the original NFC closing, subject to NFC’s requirements and limitations.
Additional requirements, documentation and loan-to-value limits apply. Please review the complete guidelines before submitting a request.
When Subordination Will Not Be Approved
NFC generally will not approve subordination in the following circumstances:
- The borrower is taking out cash or consolidating debt, unless an exception is approved under NFC’s guidelines.
- The NFC-funded renovation project is incomplete.
- The request involves a Home Equity Line of Credit (HELOC) that does not qualify for an exception.
- The borrower has an NFC first and second mortgage with the same rate and term, and NFC is being asked to subordinate its second mortgage to a new second mortgage. NFC may only subordinate the second mortgage for a refinance of the first mortgage, subject to all other subordination policies.
Exceptions may be considered when supported by clear documentation. Refer to the complete guidelines for eligibility requirements, loan-to-value limits, required documentation and details about possible exceptions.
Note for Lenders
NFC authorizes the new lender to complete the following information on the approved subordination agreement:
- Lender name
- New loan amount
- County recording information for the new mortgage
- Date of the new mortgage
Subordination Fees
- One mortgage: $100
- Two or more mortgages: $150
The fee may not be chargeable to the borrower. Each financial institution is responsible for determining whether the fee may be passed on to the borrower under its regulator’s requirements. The financial institution should be prepared to pay the fee if necessary.
Request a Subordination
To request subordination for an NFC Advantage Loan, NeighborhoodLIFT loan or Project Reinvest Down Payment Assistance loan, the new lender should email a written request to clynch@neighborhoodfinance.org.
Please attach the following documents:
- Form 1003 Loan Application
- Loan Estimate
- Borrower’s Authorization to Release Information
- Supporting documentation required for the request
Before submitting a request, please review the complete policy for detailed eligibility requirements and documentation instructions.