Posted by Joe Bonanno on February 15, 2001 at 12:22:32:
It’s called subordination. This might allow, among other things, you to pull cash out of the deal with a new first loan. At the very least you would be looking at much faster first loan approval and a much better interest rate.
I confess to being less than 100% sure, but I believe the second you receive from the seller need only contain and clause allowing subordination of seller’s interest.
Search the articles on this site for more information and look at Bronchicks articels at Legalwiz.com.
I tried to post this a day ago but I guess it didn’t stick.
Carlton mentions a few times in his course that a buyer can ask a seller to move a first mortgage to a junior position. What would be involved in this? Public records? Lender approval? Fees for change of position?
Posted by Jeff Bliven on February 16, 2001 at 01:50:11:
True, it is called Subordination!
Usually, this is done with a seller carryback morgage / trustdeed! If the original loan said that it can be subordinated, then no problem! Just take it to your new lender, and they will do the rest for you according to the terms in the note!
If by chance it isn’t in it, you can always approach the note holder and ask them to subordinate!! Be prepared to “MAKE A DEAL”, because personally, I wouldn’t do it for FREE!!
Lastly, if this loan that you want to Subordinate is an institutional lender… GOOD FREEKIN’ LUCK!! You’d be better off just refi’n the whole thing!