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A subordinate mortgage loan is any loan not in the first lien position. The subordination order goes by the order the loans were recorded. For example, your first mortgage (the mortgage used to buy the house) is recorded first because its the first loan you borrow.
Subordination agreements are prepared by your lender. The process occurs internally if you only have one lender. When your mortgage and home equity line or loan have different lenders, both financial institutions work together to draft the necessary paperwork.
The creditor usually will require the debtor to sign a subordination agreement which ensures they get paid before other creditors, ensuring they are not taking on high risks.
The signed agreement must be acknowledged by a notary and recorded in the official records of the county to be enforceable.
Subordination uses conjunctions (for example: although, because, since, when, which, who, if, whereas) to connect one dependent clause to an independent clause, creating a complex sentence. By using a complex sentence, you indicate to your reader that one idea carries more weight than the other.
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Subordinate clauses fall into three categories: direct objects, a noun modifier, or a verb modifier.
Main clauses have a subject and verb and can stand on their own. Subordinate clauses begin with a conjunction and therefore cannot stand on their own. They leave the reader thinking yesand then?
Subordination agreements are usually carried out when property owners take a second mortgage on their property. As a result, the second loan becomes the junior debt, and the primary loan becomes the senior debt.
When you take out a mortgage loan, the lender will likely include a subordination clause. Within this clause, the lender essentially states that their lien will take precedence over any other liens placed on the house. A subordination clause serves to protect the lender in case you default.
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.

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