Fill Out Your Subordination Division Form

What is a Subordination Division form?

The Subordination Division form is a document used to request subordination of a second mortgage or Home Equity Line of Credit (HELOC) when there’s a first mortgage loan involved. Essentially, it allows the second mortgage lender to agree to remain in a junior position behind a new first mortgage. Completing this form properly is crucial for the lender to consider your request.

How long does it take to process a subordination request?

Subordination requests typically take about two weeks from the time they are received for processing. It’s important to remember that all requests are handled in the order they arrive, so patience is required during this period. Unfortunately, there is no option to expedite this process.

What documents are required for the subordination request?

A complete subordination package is vital for a smooth review process. Some essential documents include a Uniform Loan Application, a Payoff Letter of the existing first mortgage, a current Property Valuation Report, and a Conditional Loan Approval Letter. Make sure to follow the complete documentation checklist to avoid delays.

Are there any types of loans that do not qualify for subordination?

Yes, certain loans are not eligible for subordination. This includes requests for loans positioned behind a first mortgage with negative amortization, reverse mortgages, or any lien in a senior position. Additionally, properties under construction or vacant are also excluded from consideration. If your loan involves a balloon payment, a line of credit, or interest-only payments, it may not qualify either.

What happens if the subordination request package is incomplete?

Submitting an incomplete package can lead to longer processing times. If documents are missing, difficult to read, or if there’s a counter offer, these issues will extend the review period and may delay your application further. It’s best to double-check everything before submission.

What is meant by debt-to-income ratio for HELOCs?

When analyzing your subordination request, Bank of America uses a specific approach to gauge your debt-to-income ratio. This includes calculating your HELOC monthly payment at a rate of 0.75% of the total HELOC line amount. This calculation helps assess your financial eligibility for the new loan terms.

Whom should I contact if I have questions regarding my subordination request?

If you have any questions, reaching out to their customer service department is highly recommended. For HELOCs, you can call 800-934-5626, and for Home Equity Loans (HELOAN), you can reach out at 800-669-5864. Remember to have your account numbers handy for quicker assistance.

Can Bank of America guarantee funding timelines with subordination requests?

No, Bank of America cannot hold responsibility for expiring interest rate locks or funding deadlines that may occur while your subordination request is being processed. It’s essential to plan accordingly and consider these timelines when seeking a subordination.

When filling out the Subordination Division form, individuals often make a variety of mistakes that can lead to delays or rejection of their requests. One common error is failing to provide complete information. Incomplete applications may include missing documents or details that are crucial for processing. Subordination requests require specific paperwork, including a Uniform Loan Application and a current Payoff Letter. Without these, the review cannot begin.

Another frequent mistake is overlooking the guidelines for HELOC monthly payments in the debt-to-income ratio calculation. It is important to note that these payments are calculated at .75% of the total HELOC line amount. Incorrect calculations can lead to ineligibility or increased scrutiny of the request.

People sometimes neglect to check the type of mortgage they are requesting subordination for. Requests associated with first mortgage loans that have a potential for negative amortization, reverses mortgages, or balloon payments will not be considered. It is vital to ensure that the lien being subordinated meets eligibility criteria to avoid unnecessary processing delays.

Additionally, applicants may fail to understand the restrictions regarding properties under construction or vacant properties. Requests for these types of properties will be rejected outright. Applicants should ensure that the property is fully developed and occupied to meet submission requirements.

Another mistake is incorrectly submitting the necessary supporting documentation. Some applicants do not provide a Flood Hazard Determination or a Flood Insurance Policy when required. These omissions could significantly delay processing, as they are essential for evaluating the risk associated with the property.

Finally, individuals may overlook the need for accurate shipping and contact information. Incorrect addresses or missing contact details can lead to delays in communication and processing. Properly completed submissions, with accurate labeling for overnight shipping and clear identification of contacts, can help streamline the process and reduce the risk of misunderstandings.

The Subordination Division form is an important document, but it is often accompanied by several other forms and documents that help facilitate the process. Below are some common documents that may be required along with the subordination request.

• Uniform Loan Application (Form 1003): This is a standardized application used by lenders to assess the borrower's creditworthiness. It collects essential information about the applicant's financial history, employment, and the property being financed.
• Uniform Underwriting and Transmittal Summary (Form 1008): This document summarizes the key details of the loan application. It is used by underwriters to evaluate the application and make a lending decision based on a review of all submitted information.
• Current Property Valuation Report: A report that provides a current estimate of the property's market value. This document is necessary for assessing the loan-to-value ratio and ensuring compliance with underwriting guidelines.
• Closing Disclosure or Loan Estimate: This document outlines the final terms of the loan, including the interest rate, monthly payment, and closing costs. It provides transparency regarding the financial aspects of the transaction.

Having the required documents ready can streamline the subordination process. It is essential to provide accurate and complete submissions to avoid delays. For any further inquiries, reaching out to the relevant customer service department can provide additional assistance.

The Subordination Division Form documents are essential for managing various financial agreements. Here are seven documents with similarities to the Subordination Form, each serving unique yet related purposes:

• Loan Modification Agreement: This document outlines the new terms of a loan after modifications have been made. Like the subordination request, it often requires specific qualifications and documentation.
• Refinance Application: Similar in process, this application seeks approval to replace an existing loan with a new one under different terms. Both forms involve assessing financial eligibility and property valuations.
• Home Equity Line of Credit (HELOC) Application: When applying for a HELOC, individuals must submit a detailed request just as they would for subordination. Both processes evaluate the borrower’s financial status and property equity.
• Closing Disclosure: This document provides borrowers with crucial details about their mortgage before closing. Like the subordination form, it ensures transparent information sharing between parties involved.
• Title Insurance Policy: Issued during the property financing process, this policy protects against title issues that may arise, similar to how subordination requests assess property liens and clearances.
• Property Appraisal Report: Valuing a property is essential in both subordination requests and standard loan agreements. Appraisals confirm property worth to ensure that the loan amount aligns with market value.
• Borrower’s Authorization Form: This document allows lenders to access the applicant's financial information. It is similar to the subordination process, where the lender may need to verify various financial details for approval.

When filling out the Subordination Division form, there are important dos and don'ts to keep in mind. These guidelines help ensure that your request is processed quickly and efficiently.

• Do complete the subordination request form accurately.
• Do provide all required documentation along with your request.
• Do check that your HELOC payment meets the debt-to-income ratio requirements.
• Do submit your request in the order it is received.
• Do use clear and legible handwriting or a typed format for any textual entries.
• Don’t submit requests for properties currently under construction or vacant.
• Don’t include subordination requests for loans that may negatively amortize or include balloon payments.
• Don’t forget to include your complete contact information.
• Don’t assume that your request will be expedited; processing takes time.

Understanding the Subordination Division form can be crucial for homeowners considering their options. However, there are several misconceptions that might lead to confusion during the process. Below are six common misconceptions, along with clarifications to help guide you.

• Subordination requests can be expedited. Many believe these requests can be processed quickly. However, please note that all requests take up to two weeks to complete and are processed in the order they are received. No expedited options are available.
• All types of loans can be subordinated. It's a common misunderstanding that every loan can be subordinated. Subordination requests for loans that are behind a first mortgage with negative amortization, reverse mortgages, or certain Equity Credit Lines are not considered.
• Incomplete applications will still be accepted. Some people think they can submit missing documents later. In reality, incomplete packages may lead to extended processing times, so it is vital to ensure that all required documentation is included with your request.
• Subordination requests can be made on properties under construction. Many assume they can submit a subordination request for such properties. However, requests for properties that are currently under construction or vacant will not be considered.
• It is unnecessary to provide a current property valuation. Some may overlook the need for a recent property evaluation, thinking it isn't essential. In fact, a current Property Valuation Report within the last 120 days is a required part of the subordination package.
• All loans, regardless of terms, can be subordinated. There is a misconception that any type of loan can be subordinated. Unfortunately, subordination requests behind first mortgage loans with balloon payments, interest-only payments, or adjustable-rate mortgages (ARMs) with a fixed-rate period of less than 36 months won’t be considered.

By addressing these misconceptions, the subordination process can be clearer and smoother for homeowners. If you have further questions, please reach out to customer service for assistance.

When considering a subordination request, it's essential to follow proper guidelines to ensure a smoother process. Here are some key takeaways to keep in mind:

• Processing Times: Subordination requests can take up to two weeks to complete. Be aware that these requests are handled in the order they are received.
• Request Limitations: Certain subordination requests will not be considered, including those involving loans with negative amortization, reverse mortgages, or properties currently under construction.
• Documentation Requirements: A complete subordination package is necessary. Missing or illegible documents can delay processing further.
• HELOC Payment Calculation: For qualification, the HELOC monthly payment in the debt-to-income ratio is calculated at 0.75% of the total HELOC line amount.
• Contact Information: If you have questions, reaching out to customer service can provide clarity. Be ready with your account numbers for assistance.
• Appraisal Requirements: Different property values have varied appraisal requirements. Ensure you are familiar with the specific needs before submitting your request.