What Is a Mortgage Subordination Agreement?

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A mortgage subordination agreement is a document frequently used when there are two mortgages on a home, and the homeowner is looking to refinance the first mortgage. The mortgage subordination agreement specifies which mortgage takes precedence over the other.


When a homeowner defaults on his mortgage, the first mortgage company will receive payment from the sale of the home before the second mortgage company. When a homeowner refinances his first mortgage, he is essentially paying it off and receiving a new loan. What was his second mortgage becomes his first mortgage, and the new mortgage is now second in line. This is why lenders of a first mortgage refinance want a mortgage subordination agreement signed by the second mortgage company. This is to guarantee that they remain in the first mortgage position.

The Process of Getting a Mortgage Subordination Agreement

Start the process of getting the mortgage subordination agreement signed as soon as you know that it is needed. Some lenders will assist with this process, but others will not. When contacting the second mortgage company, explain that you are refinancing your first mortgage, and that the company is requesting a mortgage subordination agreement. It may take a few weeks for the second mortgage company to process the paperwork and get it back to you or your lender.