What is a subordination?
In a real estate transaction, a subordination agreement often comes up when a home has a first and a second mortgage and the borrower wants to refinance the first mortgage. The purpose of a subordination agreement is to adjust the priority of the new loan. In other words, you refinance your first mortgage, keep your second mortgage, and your second mortgage holder agrees to remain in second position behind the new first mortgage.
Updated on: 07/07/2022