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Subordination Requirements
The City of El Cajon and El Cajon Redevelopment
Agency will subordinate FTHB and Single-Family Rehabilitation
Loan Program loans under the following conditions:
New Loan Terms:
FHA, VA, Conventional no
cash-out refinances where there is a reduction
of PITI and an improvement in loan terms. Impounds on the new first mortgage will be required. In addition, the City/Agency will not subordinate to negatively amortizing, prepayment penalty, reverse mortgage loans, or financing subordinate to City/Agency liens.
Cash Back/Cash-Out:
Any loan proceeds in excess of 1% of the new loan amount must be applied as a principal-reduction payment to the new 1st mortgage balance at close of escrow.
Documentation required for City/Agency review:
1. Copy of the new lender application (1003)
2. Copy of the appraisal
3. Copy of the preliminary title report
4. Copy of an accurate estimated closing statement from escrow
5. Copy of escrow instructions
6. Credit Report (3) Merge (Borrower/Spouse)
7. Copy of the new 1st Mortgage Note (and Riders, if applicable)
8. Copy of the 1st Mortgage Payoff Demand
9. Subordination fee of $100 (effective May 15, 2003)
10. Any additional documentation that may be requested by the City/Agency
Buy-Down Balances:
If the payoff of the 1st mortgage has
a remaining interest rate buy-down balance currently
in escrow, those monies must be applied to the payoff
balance at close of escrow and may not be refunded
to the borrower.
Exceptions:
In the event an exception to these Subordination Requirements is requested and granted, the City/Agency may require execution and recording of a Loan Modification Agreement, including any/all other applicable documentation necessary for approval, through close of escrow.
Re-Review after a Subordination Has Been Issued:
If loan terms change after a Subordination Agreement has been issued to the refinance Lender, Escrow Company or Title Company, there will be an additional fee of $50.00 for re-review of the proposed loan terms and issuance of a second or each subsequent Subordination Agreement.
Send All documentation to the City/Agency as follows:
CITY OF EL CAJON
DEPT. OF REDEVELOPMENT AND HOUSING
200 CIVIC CENTER WAY
EL CAJON CA 92020-3996
(619) 441-1710 FAX: (619) 441-1595
The City/Agency will review the above documentation
for compliance with existing guidelines and
will generally render a decision within 3-7 business days of all requested documentation.
A Subordination Agreement and any other applicable documentation will be issued by
the City/Agency and will be forward to the
escrow company with specific instructions
for compliance, unless instructed otherwise.
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