Mortgage Subordination Agreement Template

MORTGAGE SUBORDINATION AGREEMENT TEMPLATE FAQ

What is a mortgage subordination agreement?

A Mortgage Subordination Agreement is a document where a lienholder (usually an existing mortgage lender) agrees that its lien will be lower priority than another lien. This is commonly needed when refinancing, taking a second loan, or recording a new deed of trust while keeping an existing lien in place.

When is subordination needed?

Subordination is often required when: (1) a homeowner refinances and a second lien exists, (2) a home equity line or second mortgage must stay in place but be re-ordered, or (3) a new construction or rehab loan requires first-lien priority. This template is a general structure — lenders often have their own required forms.

What should be included?

Include: the subordinating lender (current lienholder), the senior lender (new/priority lien), property description, the existing lien details (recording info), the new lien details, and a clear statement of priority. This template includes a recording section and an exhibit for the legal description.

Does this change the loan terms?

Usually no. It changes lien priority only, not the underlying payment terms, unless the parties separately amend the loan documents.

Does it have to be recorded?

Typically yes. Recording provides public notice of the priority change. Recording rules vary by jurisdiction. This template includes a recording clause.

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