Suntrust Subordination PDF Details

When it comes to mortgages, there are a few different ways in which the debt can be structured. One of these is through subordination. This is when one lender agrees to let another lender take a higher ranking on the debt, essentially making them more important in terms of payments and possessions in the event of bankruptcy. Suntrust offers subordination forms to help make this process easier for both borrowers and lenders. The form is relatively straightforward, requiring only basic information about the borrower, the mortgage, and the creditor. It's important to note that not all lenders offer subordination, so be sure to check with your specific Mortgage Provider beforehand.

This page includes details about suntrust subordination. It's definitely worth spending some time to study this before starting submitting your form.

QuestionAnswer
Form NameSuntrust Subordination
Form Length22 pages
Fillable?No
Fillable fields0
Avg. time to fill out5 min 30 sec
Other namessun trust subordination acknowledgement and agreement, suntrust subordinatino acknowlegement and agreement, suntrust subordination acknowledgement and agreement, suntrust subordination

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Section 1.21 – Subordination of SunTrust Second Mortgage Loans

In This Section This section contains the following topics.

 

Overview

2

Summary

2

Related Bulletins

2

Subordination of SunTrust Combo Second and EZ Two Mortgage Loans

3

General

3

Eligible Occupancy/ Property Types

4

Ineligible Occupancy/ Property Types

4

New First Mortgage Requirements

4

Existing Combo and EZ Two Second Mortgage Requirements

5

Geographic Restrictions

5

Maximum TLTV

5

Underwriting Requirements

6

General

6

Declining Markets Guidelines

6

Maximum Number of Financed Properties

6

Appraisal Documentation

6

Procedures for Subordination Request

7

Subordination Agreement Requirements

10

Subordination of SunTrust Equity Line and Equity Loans

11

General

11

Service Levels

11

Ineligible Occupancy/ Property Types

12

Geographic Restrictions

12

Maximum TLTV/HTLTV

12

Underwriting Requirements

13

General

13

Declining Markets

13

Maximum Number of Financed Properties

14

Income Documentation

14

Qualifying Ratio and Payment Guidelines

14

Appraisal Documentation

15

Modifications to Existing Equity Lines and Equity Loans

15

Procedures for Subordination Request

16

Automatic Subordination Process for Virginia Properties

18

General

18

Requirements for the Automated Process

18

Procedures for Subordinations of Virginia Properties

19

Title Insurance Requirements

20

Automatic Subordination Process for Texas Properties

21

General

21

Requirements for the Automated Process

21

Procedures for Subordinations of Texas Properties

22

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 1 of 22

Broker Seller Guide

 

 

 

 

 

Overview

Summary

The Subordination of SunTrust Second Mortgage Loans document provides guidelines for the subordination of eligible existing SunTrust Bank and SunTrust Mortgage, Inc. second mortgage liens (i.e., Combo, EZ Two, Equity Lines and Equity Loans).

Reference: Subordinations of secondary financing in connection with the DU Refi Plus™ and the Freddie Mac Relief Refinance MortgageSM loan program must follow the subordination guidelines outlined in Section 1.21: Subordination of SunTrust Second Mortgage Loans of the Broker Seller Guide.

If the existing second is a SunTrust Combo or EZ Two second mortgage, SunTrust Mortgage, Inc. (i.e., SunTrust underwriter or contract MI underwriter on the behalf of SunTrust) must approve the subordination request at the same time the new first mortgage is approved.

If the existing second is a SunTrust Bank or SunTrust Mortgage, Inc. equity line or equity loan, the subordination request must be processed through the Orlando Consumer Lending Sales Center (CLSC).

Note:

All subordination requests MUST be approved by SunTrust.

Related Bulletins

General

Related bulletins are provided below in PDF format. To view the list of published bulletins,

 

select the applicable year below.

 

2013

 

2012

 

2011

 

2010

 

2009

 

 

 

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 2 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Combo Second and EZ Two Mortgage Loans

General

Existing SunTrust Combo and EZ Two second mortgage loans that are not being paid

 

off with the proceeds of the new first mortgage are eligible for subordination in

 

accordance with the guidelines outlined in this document.

 

Note: In all cases where an existing SunTrust Combo or EZ Two second mortgage lien

 

is not being paid off with the proceeds of the new first mortgage, the second lien MUST

 

remain in second lien position.

 

The existing SunTrust Combo and EZ Two second mortgage MUST be subordinated

 

behind a NEW SunTrust first mortgage. The existing SunTrust Combo and EZ Two

 

second mortgage CANNOT be subordinated behind a “non-SunTrust” first mortgage

 

loan.

 

Notes:

 

SunTrust Combo second mortgage loans are identified by a ten (10) digit loan

 

number.

 

The EZ Two second mortgage is also assigned a ten (10) digit loan number.

 

The new first mortgage product must allow for the subordination of an existing SunTrust

 

second lien.

 

Reference: See the “New First Mortgage Requirements” subtopic subsequently

 

presented in this document for additional information regarding new first mortgage

 

product restrictions.

 

Additionally, the new LTV/TLTV must meet the more restrictive of the specific new first

 

mortgage guidelines or the guidelines outlined in this document.

 

Reference: See the applicable first mortgage product description for secondary

 

financing guidelines.

 

Any loans subject to a SunTrust Combo or EZ Two Second Mortgage subordination

 

must be submitted to SunTrust for underwriting and approval.

 

SunTrust Mortgage, Inc. (i.e., SunTrust underwriter or contract MI underwriter on the

 

behalf of SunTrust) must approve the subordination request at the same time the new

 

first mortgage is approved.

 

A subordination agreement is required to assure the second lien remains in second lien

 

position.

 

Notes:

 

For existing SunTrust Combo and EZ Two second mortgages, the subordination

 

agreement is drafted by the closing attorney/settlement agent.

 

The subordination agreement is executed at the closing of the new first mortgage

 

and is recorded with the first mortgage documents.

 

 

 

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 3 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued

Eligible

The following occupancy/property types are eligible for subordination:

Occupancy/

 

Property Types

1-4 unit properties,

 

primary residences,

 

second homes,

 

investment properties,

 

leasehold properties (excluding Georgia Power leaseholds),

 

modular housing,

 

properties in excess of 10 acres,

 

warrantable condominiums, including condominium conversions, and

 

warrantable PUDs.

 

 

Ineligible

The following occupancy/property types are ineligible for subordination:

Occupancy/

 

Property Types

condotels,

 

cooperatives,

 

Georgia Power leaseholds,

 

manufactured housing,

non-warrantable condominiums,

non-warrantable PUDs, and

properties currently listed for sale.

New First

Mortgage

Requirements

If the new first mortgage product is a short term ARM (i.e., 3/1, 1 year, etc.), the existing SunTrust Combo and EZ Two second mortgage is NOT eligible for subordination.

The maximum loan term of the new first mortgage is 30 years.

The new loan must be the same or a more stable product than the current first mortgage when subordination of a Combo or EZ Two second mortgage is required. Fixed rate mortgages are only eligible to be refinanced into a new fixed rate mortgage. ARM loans must be refinanced to either a same term ARM, longer term ARM or a fixed rate mortgage.

The new first mortgage loan should put the borrower in a more favorable financial position, by either:

reducing the interest rate; or

replacing an interest only or balloon reset mortgage with a fixed, fully amortizing mortgage.

Cash-out refinances are permitted if all funds are being used to reduce the unpaid principal balance of the existing SunTrust Combo or EZ Two second lien.

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 4 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued

New First

Mortgage Requirements, (continued)

The new first mortgage loan may include normal and customary closing costs up to a maximum 5% of the new loan amount or $10,000, whichever is less.

There is no maximum P&I payment increase; however, when the new P&I payment increases by more than 20% of the existing P&I or interest-only payment, the borrower’s income and employment must be documented and the maximum debt-to- income (DTI) ratio is 55%.

When calculating the payment increase for existing loans with adjusting payments, the current payment must have been made for at least seven (7) consecutive months; otherwise, the lowest P&I payment or interest-only payment made during the most recent 12 months must be used.

Existing

The existing Combo or EZ Two second must be current and cannot have any 30-day late

Combo and EZ

payments within the last 12 months.

Two Second

 

Mortgage

 

Requirements

 

 

 

Geographic

References:

Restrictions

See the applicable new first mortgage product description and Section 1.11: Geographic

 

State Restrictions of the Broker Seller Guide for specific geographic restrictions that may

 

apply.

 

If the subject property is located in the state of Virginia, see the “Automatic Subordination

 

Process for Virginia Properties” topic subsequently presented in this document for

 

information on the state of Virginia’s automatic subordination procedures.

 

If the subject property is located in the state of Texas, see the “Automatic Subordination

 

Process for Texas Properties” topic subsequently presented in this document for

 

information on the state of Texas’ automatic subordination procedures.

Maximum TLTV • The maximum TLTV may NOT exceed 95% in any case.

If the subject property is a condominium, the maximum TLTV must be reduced by 5%.

Note: If there are multiple reductions that apply to a single property, then all are applied cumulatively. For example, a condominium in a declining market would be subject to a 10% TLTV reduction.

If the TLTV exceeds 95%, then the loan must be conditioned for a principal curtailment of the existing Combo or EZ Two second to meet the TLTV guidelines.

The current unpaid principal balance of the Combo or EZ Two second mortgage must be used in calculating the TLTV.

There is no maximum LTV requirement on the Combo or EZ Two second mortgage.

The current payment of the existing Combo or EZ Two second mortgage must be used when calculating the housing and debt-to-income (DTI) ratios on the new first mortgage.

 

 

Continued on next page

 

 

 

 

 

 

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 5 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued

Underwriting

General

Requirements

Unless otherwise published in this document, borrowers must meet all of the guidelines

 

for secondary financing for the new first mortgage product [including, but not limited to

 

minimum credit score, maximum debt-to-income (DTI) ratio, maximum LTV/TLTV, AUS

 

requirements, etc.].

 

Reference: See the applicable first mortgage product description for secondary

 

financing guidelines.

 

Third lien positions are NOT acceptable.

Declining Markets Guidelines

The following guideline must be followed for all existing SunTrust Combo and EZ Two second mortgage liens being subordinated when the subject property is located in a declining market:

If the subject property is located in a declining market, the maximum TLTV must be reduced by five percent (5%).

Note: If there are multiple reductions that apply to a single property, then all are applied cumulatively. For example, a condominium in a declining market would be subject to a 10% TLTV reduction.

 

Reference: See Section 1.17: SunTrust Mortgage Declining Market Guidelines of the

 

Broker Seller Guide for additional information.

 

Maximum Number of Financed Properties

 

Reference: See Section 1.20: Maximum Number of Financed Properties and Borrower

 

Exposure of the Broker Seller Guide for guidelines.

 

Note: The maximum total exposure is $2.5 million dollars on all SunTrust balance sheet

 

(Portfolio) loan products (INCLUDING any existing SunTrust Bank or SunTrust Mortgage

 

seconds being subordinated).

 

 

Appraisal

A full appraisal (i.e. form 1004/70, form 1025/72 etc.) is required.

Documentation

The new appraisal must be dated within 120 days at the time of underwriting.

 

Fannie Mae’s Property Inspection Waiver (PIW), Freddie Mac’s Property Inspection

 

Alternative (PIA), Freddie Mac Form 2070, Freddie Mac Form 2055, and automated

 

valuation models (AVMs) are NOT acceptable.

 

 

 

 

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 6 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued

Procedures for Follow the steps below to complete a subordination request for an existing SunTrust Subordination Combo or EZ Two second mortgage.

Request

Step

Action

1It is the responsibility of the Broker to advise the closing attorney/settlement agent that a subordination agreement will be required.

SunTrust Mortgage, Inc will NOT draft or create the subordination agreement. The closing attorney/settlement agent is responsible for preparing the subordination agreement and sending the subordination agreement to the SunTrust Wholesale branch office for review.

Notes:

A Substitution of Trustee form prepared by the attorney or settlement agent will be required when the Subordination Agreement is submitted to SunTrust for approval and signature if the following applies:

if the original trustee on the recorded Deed of Trust is no longer serving as trustee, and

the Subordination Agreement requires the signature of the trustee.

The Substitution of Trustee form and the Subordination Agreement should list the applicable trustee by state.

Click here for a list of trustees by state.

The Subordination Agreement must include in the upper left hand corner of the document the following information:

When Recorded Return To:

SunTrust Mortgage, Inc

1001 Semmes Avenue

3rd Floor

Mail Code RVW-5043

Attn: Final Docs

Richmond, VA 23224

Loan Number

Note: The loan number of the SunTrust Combo or EZ Two Second

Mortgage must be referenced on the Subordination Agreement.

Reference: See the “Subordination Agreement Requirements” subtopic subsequently presented in this topic for additional information.

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 7 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued

Procedures for Subordination Request, (continued)

 

Step

Action

 

 

1 (cont.)

If the Combo or EZ Two loan being subordinated is a MERS (Mortgage

 

 

 

Electronic Registration System) loan, the subordination agreement must

 

 

 

be prepared in the name of MERS.

 

 

 

The settlement agent must insert the following verbiage in the

 

 

 

Subordination Agreement:

 

 

 

"MERS" is Mortgage Electronic Registration Systems, Inc. MERS is a

 

 

 

separate corporation that is acting solely as a nominee for Lender

 

 

 

and Lender’s successors and assigns. MERS is organized and

 

 

 

existing under the laws of Delaware, and has a mailing address of

 

 

 

P.O. Box 2026, Flint, MI 48501-2026, and/or a street address of 1901

 

 

 

E. Voorhees Street, Suite C, Danville, IL 61834. The MERS

 

 

 

telephone number is (888) 679-MERS. FOR PURPOSES OF

 

 

 

RECORDING THIS DOCUMENT MERS IS THE MORTGAGEE OF

 

 

 

RECORD.

 

 

 

Note: SunTrust Mortgage, Inc will NOT subordinate to a 3rd lien position.

 

 

 

 

 

 

 

 

 

 

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 8 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued

Procedures for Subordination Request, (continued)

Step

Action

2The COMPLETE loan package must be submitted to SunTrust Mortgage for review and approval.

The SunTrust Underwriter must review the file and complete the SunTrust Combo and EZ Two Second Subordination Request (BRO 0238) and the SunTrust Second Lien Subordination Request (BRO 1378) forms.

Once the subordination is approved by the underwriter, the Subordination Agreement along with the SunTrust Second Lien Subordination Request Form (BRO 1378) and a copy of the Good Faith Estimate must be faxed to 804-675-9792, emailed to fnma/fhlmcsubordinations@suntrust.com or mailed to the following address for review and approval.

SunTrust Mortgage

1001 Semmes Avenue

Mail Code RVW-3002

Attn: Subordinations

Richmond, VA 23224

The signed Subordination Agreement will be sent to the branch or attorney within three (3) business days.

Notes:

A self addressed overnight package must be submitted with the Subordination Agreement and must be addressed to the person in the branch or the attorney who should receive the signed Subordination Agreement.

Faxed and e-mailed packages to the SunTrust Subordination Department may provide a faxed or scanned pre-paid overnight shipping label, or provide a shipping address and overnight account number instead of a pre-paid self addressed overnight package.

The Wholesale branch office is responsible for notifying the Broker that the request for subordination has been approved and whether a principal curtailment and/or a balance reduction on the new first mortgage loan are a condition for approval.

To request status updates on submitted Subordination Agreements, send an email to fnma/fhlmcsubrodinations@suntrust.com, include the following information:

Borrower name,

Address, and

Second Mortgage Loan Number.

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 9 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued

Procedures for Subordination Request, (continued)

 

Step

 

 

Action

 

 

3

 

 

Once the subordination agreement has been executed at closing, the

 

 

 

 

 

closing attorney/settlement agent should include the recorded

 

 

 

 

 

Subordination Agreement in the closed loan package that is sent back to

 

 

 

 

 

SunTrust at the following address:

 

 

 

 

 

SunTrust Mortgage

 

 

 

 

 

1001 Semmes Avenue

 

 

 

 

 

3rd Floor

 

 

 

 

 

Mail Code RVW-5043

 

 

 

 

 

Attn: Final Docs

 

 

 

 

 

Richmond, VA 23224

 

 

 

 

 

Note: A copy of the executed Subordination Agreement must be retained in

 

 

 

 

 

the first mortgage loan file.

 

 

 

 

 

 

 

 

 

 

 

Subordination

The

 

subordination agreement must contain the following information when being

Agreement

reviewed by the SunTrust Wholesale Branch for approval:

Requirements

Names of the parties

 

 

Business addresses are currently optional

 

Description of the subject property (legal description is preferred; however, the

 

 

address is acceptable)

 

Identification of the mortgage or trust deed to be subordinated:

 

 

 

Names of parties

 

 

 

Date of execution

 

 

Reference to book and pages of recordation

 

Identification of encumbrance(s) (legal claim to a property) to be superior in priority

 

Statement of consideration:

 

 

Inducement to lender to loan money

 

 

 

Payment of Money

 

 

Other, but should make clear that some consideration was given

 

Terms of subordination of the loan (optional).

 

Covenant of validity of mortgage or trust deed to be subordinated (optional)

 

Cancellation of subordination provision in mortgage or trust deed (optional)

 

Words indicating binding effect

 

Date of Agreement

 

Signatures of borrowers and lender

 

Attestation

 

Acknowledgements (Notary)

 

The language in the document must clearly indicate that the subordination pertains to

the one loan. “Blanket” subordination agreements for subsequently recorded interests are NOT acceptable by SunTrust.

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 10 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Equity Line and Equity Loans

General

Service Levels

Existing SunTrust equity line/equity loans that are not being paid off with the proceeds of the new first mortgage are eligible for subordination in accordance with the guidelines outlined in this topic.

Note: In all cases where an existing SunTrust equity line/equity loan is not being paid off with proceeds of the new first mortgage, The equity line/loan MUST remain in second or third lien position. A Subordination Agreement must be executed.

The existing SunTrust equity line/equity loan is eligible for subordination behind a new SunTrust first mortgage or a “non-SunTrust” first mortgage. SunTrust Bank equity lines/equity loans are identified by a seventeen (17) digit loan number. SunTrust Bank Access 3 lines of credit contain sixteen (16) digits.

The new first mortgage product must be eligible for subordinate financing.

Additionally, the new LTV/TLTV/HTLTV must meet the more restrictive of the specific new first mortgage guidelines or the guidelines outlined in this policy.

Reference: See the applicable first mortgage product description for secondary financing guidelines.

Any loans subject to a SunTrust equity line or equity loan subordination must be submitted to SunTrust for underwriting and approval.

The subordination request must be processed through the Orlando Consumer Lending Sales Center (CLSC).

A subordination agreement is required to assure the equity line/loan remains in second or third lien position.

The borrower(s) MUST receive a tangible net benefit from the refinance transaction in order for the second mortgage to be eligible for subordination.

Notes:

For existing SunTrust equity line/equity loans, the subordination agreement is drafted by the SunTrust Orlando CLSC group at the time the subordination request is reviewed and approved.

The subordination agreement is executed at the closing of the new first mortgage and is recorded with the first mortgage documents.

Subordination requests must be submitted allowing for the following service levels:

Type of 1st Mortgage Lien

 

Turn Time

For subordinations involving a

3

business days for rate/term refinance

SunTrust Mortgage 1st Lien

transactions

 

5

business days for cash-out refinance

 

transactions

For subordinations involving a

Minimum of 10 business days

non-SunTrust Mortgage 1st Lien

 

 

Note: Service levels are determined at the time the Orlando CLSC receives the subordination request and any required documentation.

 

 

Continued on next page

 

 

 

 

 

 

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 11 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Equity Line and Equity Loans, Continued

Ineligible

The following occupancy/property types are ineligible for subordination:

Occupancy/

3-4 unit properties, and

Property Types

 

investment properties.

 

Note: If a property type is ineligible based on the first mortgage loan program then the

 

second mortgage is NOT eligible for subordination.

 

 

Geographic

References:

Restrictions

See the applicable new first mortgage product description and Section 1.11: Geographic

 

State Restrictions of the Broker Seller Guide for specific geographic restrictions that may

 

apply.

 

If the subject property is located in the state of Virginia, see the “Automatic Subordination

 

Process for Virginia Properties” topic subsequently presented for information on the state

 

of Virginia’s automatic subordination procedures.

Maximum

TLTV/HTLTV

The credit limit for equity lines can be obtained by calling SunTrust’s Consumer Loan Servicing (CLS) Department at 1-800-368-7700.

The following table provides the maximum TLTV and the maximum combined loan amounts for equity line subordinations:

Maximum Combined Line/Loan Amount

 

 

 

 

Property Type

 

TLTV

 

 

Single Family 1-2 unit

 

Condominium

 

 

 

(Townhouse, PUD)

 

 

 

 

 

 

 

 

60%

 

$2,000,000

 

$1,250,000

65%

 

$1,750,000

 

$1,250,000

70%

 

$1,500,000

 

$1,000,000

75%

 

$1,500,000

 

$1,000,000

80%

 

$1,500,000

 

$1,000,000

85%

 

$1,250,000

 

$750,000

For lines, the maximum amount of credit available, not the current balance, must be used in calculating the TLTV/HTLTV.

For loans, the current unpaid principal balance of the existing equity loan must be used in calculating the TLTV.

Notes:

The maximum HTLTV may not exceed 100% IN ANY CASE.

For rate/term refinance transactions, if the second mortgage has a TLTV > 85%, CLSC will evaluate the subordination request on a case by case basis to determine if the borrower is receiving a benefit from the rate/term refinance transaction before making a decision regarding the subordination request.

If the new TLTV/HTLTV exceeds the new first mortgage guidelines, the loan must be conditioned for a reduction in the credit limit to meet the maximum allowable TLTV/HTLTV for the applicable first mortgage product.

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 12 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Equity Line and Equity Loans, Continued

Maximum

Reference: See the “Underwriting Requirements” subtopic subsequently presented in this

TLTV/HTLTV,

policy for additional information on TLTV/HTLTV restriction when the property is located in

(continued)

a declining market.

 

 

Underwriting

General

Requirements

Unless otherwise published in this document, borrowers must meet all of the guidelines

 

for secondary financing for the new first mortgage product [including, but not limited to

 

minimum credit score, maximum debt-to-income (DTI) ratio, maximum

 

LTV/TLTV/HTLTV, AUS requirements, etc.].

 

Reference: See the applicable first mortgage product description for secondary

 

financing guidelines.

 

All subordination requests will require a full re-underwrite by the Orlando CLSC. It is

 

recommended that the subordination request be sent to Orlando CLSC at the same

 

time the first mortgage is sent to underwriting.

 

There may be instances when line modification (lowering of the maximum equity line

 

amount and/or freezing the access to the equity line) is required to approve the

 

subordination request.

 

Note: In a transaction where the borrower receives the lesser of $5,000 or 3% of the

 

new loan amount in cash at closing, the transaction will NOT be considered a “cash-

 

out” transaction.

 

Reference: See the “Service Levels” subtopic previously presented in this topic for

 

additional information regarding underwriting turn times.

 

Approval of subordinations involving properties secured by condominiums where the

 

TLTV exceeds 85% and a SunTrust 1st mortgage is not in place are not acceptable.

 

Reference: See the “Income Documentation,” “Qualifying Ratio and Payment Guidelines”

 

and “Appraisal Documentation” subtopics subsequently presented in this topic for

 

additional information regarding underwriting requirements.

Declining Markets

The following guideline must be followed for all existing SunTrust equity line/equity loans being subordinated when the subject property is located in a declining market:

If the property is located in a declining market, the maximum TLTV/HTLTV is reduced by 5%.

For all second homes, the maximum TLTV/HTLTV is reduced by 5%.

If there are multiple reductions applied to a single property, then they are applied cumulatively (for example: a second home in a declining market would be subject to a 10% LTV reduction).

Note: The “Workflow Appraisal Reconciliation” guidelines outlined in Section 1.17: SunTrust Mortgage Declining Market Guidelines of the Broker Seller Guide are NOT eligible when an existing SunTrust equity line/equity loan is being subordinated and the subject property is located in a declining market. In ALL cases, the maximum TLTV/HTLTV MUST be reduced as outlined above.

 

 

Continued on next page

 

 

 

 

 

 

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 13 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Equity Line and Equity Loans, Continued

Underwriting

Declining Markets, (continued)

 

Requirements,

 

 

(continued)

Reference: See Section 1.17:

SunTrust Mortgage Declining Market Guidelines of the

 

Broker Seller Guide for additional information.

 

Maximum Number of Financed Properties

 

Reference: See Section 1.20: Maximum Number of Financed Properties and Borrower

 

Exposure of the Broker Seller Guide for guidelines.

 

Note: The maximum total exposure is $2.5 million dollars on all SunTrust balance sheet

 

(Portfolio) loan products (INCLUDING any existing SunTrust Bank or SunTrust Mortgage

 

seconds being subordinated).

 

 

Income

Income verification must be provided on all requests for self employed individuals and

Documentation

any requests exceeding an original TLTV/HTLTV of 75% on cash-out refinance

 

transactions.

 

Self employed borrowers would include borrowers whose commissioned earnings

 

exceed 50% of their income.

 

Income verification is NOT required for borrowers with passive or salaried income.

Qualifying

Ratio and

Payment

Guidelines

Ratios are calculated on ALL subordination requests, regardless of the original loan program. The maximum debt to income (DTI) ratio is calculated based on the borrower’s gross monthly income and credit score, as outlined in the table below:

 

Monthly Income

 

 

Credit Score / Max DTI

 

 

>/= 720

 

660-719

 

 

 

 

</= $3,000

 

40%

 

40%

$3,001 - $5,500

 

50%

 

45%

$5,501 - $8,000

 

50%

 

50%

> $8,000

 

50%

 

50%

For equity lines of credit, the qualifying payment is equal to one percent (1%) of the credit limit, regardless of which payment option is selected or the amount drawn at initial draw, closing, etc. For equity loans, the qualifying payment is the actual monthly payment.

A maximum DTI of 40% is required if the borrower does not meet the credit requirements for an acceptable credit bureau file.

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 14 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Equity Line and Equity Loans, Continued

Appraisal Documentation

A current appraisal/valuation must be provided on each request with review and approval by the Orlando CLSC prior to final approval of the subordination request.

The more restrictive of the first mortgage or the following guidelines apply.

If an appraisal is ordered, the appraisal must be used rather than other valuation methods.

Complete (1004) appraisals are acceptable.

Appraisers must be engaged directly by the bank or another financial services institution. Appraisals prepared for other institutions and accepted by SunTrust must conform to regulatory and SunTrust guidelines. An appraisal prepared for the borrower is NOT acceptable.

Appraisers engaged by SunTrust must be state licensed or certified, and they must be either approved by SunTrust’s real estate services providers or be on SunTrust’s approved appraiser list if directly engaged by the bank. Final selection of an appraiser is based on the appraiser’s qualifications and experience for the particular type of real estate property being appraised.

Appraisals (1004, etc.) must be current (less than 90 days old).

LP Property Inspection Alternative (PIA) and DU Property Inspection Waivers (PIW) are not acceptable valuation methods.

Modifications to Existing Equity Lines and Equity Loans

A modification to the existing equity line or a balance reduction to the existing equity loan may be required for any of the following reasons:

the new TLTV/HTLTV exceeds the guidelines for the new first mortgage and the loan was approved with a condition for a reduction in the total amount of equity line credit available or equity loan current balance, or

the equity line is in third lien position, or

the new TLTV/HTLTV exceeds Orlando CLSC underwriting guidelines.

Note: When a modification of the existing equity line or a balance reduction to the existing equity loan is required, it is very important that the borrower is advised prior to closing that the terms of his/her equity line/equity loan will be changing due to one of the reasons stated above.

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 15 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Equity Line and Equity Loans, Continued

Procedures for Follow the steps below to complete a subordination request for an existing SunTrust Subordination equity line or equity loan.

Request

 

Steps

Actions

 

 

1

The subordination request must be processed through the Orlando

 

 

 

Consumer Lending Sales Center (CLSC).

 

 

 

The following documents are required when submitting a subordination

 

 

 

and/or modification request:

 

 

 

The Broker must complete the Consumer Loan Subordination

 

 

 

Requirements (BRO 0800) form,

 

 

 

Copy of the Application (Form 1003),

 

 

 

Copy of the complete (i.e., all pages) Appraisal (Form 1004) less

 

 

 

than 90 days old from the subordination request date,

 

 

 

Copy of the Underwriting Transmittal Summary (Form 1008) or

 

 

 

AUS Findings,

 

 

 

Income documentation (if applicable),

 

 

 

Title commitment search – first 3-5 pages only (i.e., SunTrust lien

 

 

 

information) less than 30 days old from the subordination request

 

 

 

date, and

 

 

 

Flood Insurance Declaration page (if applicable).

 

 

 

Note: CLSC will NOT subordinate to a 3rd lien position.

 

 

 

 

 

 

2

Orlando CLSC Subordination Department Contact Information

 

 

 

All requests should be faxed to 1-877-557-7543

 

 

 

For questions and/or problems please call 1-866-732-1685

 

 

 

All paper requests may be sent to:

 

 

 

SunTrust Bank

 

 

 

Subordination Department

 

 

 

FL-Orlando 9136

 

 

 

7455 Chancellor Drive

 

 

 

Orlando, FL 32809

 

 

3

Subordination Fees

 

 

 

There is no subordination fee charged to SunTrust Mortgage for a

 

 

 

subordination request behind a SunTrust 1st mortgage.

 

 

 

There is a subordination fee charged to the borrower of $200.00 for a

 

 

 

second lien subordination request behind a non-SunTrust 1st mortgage.

 

 

 

The subordination request will not be reviewed until the fee is received.

 

 

 

Any revisions to the first mortgage loan amount will be assessed a

 

 

 

revision fee of $50.00 if the request is received within 30 days from the

 

 

 

completion date of the subordination approval. Revisions older than 30

 

 

 

days or if the lender’s name changes will be considered a new package

 

 

 

and an additional fee of $200 will be assessed.

 

 

4

SunTrust Orlando CLSC department will notify the requestor of the

 

 

 

status of the subordination request.

 

 

 

 

 

 

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 16 of 22

Broker Seller Guide

 

 

 

 

 

Subordination of SunTrust Equity Line and Equity Loans, Continued

Procedures for Subordination Request, (continued)

 

Steps

 

Actions

 

5

SunTrust Orlando CLSC department will draft and prepare the

 

 

 

 

subordination agreement at the time the subordination request is

 

 

 

 

reviewed and approved.

 

 

 

If the SunTrust equity line/equity loan requires a modification

 

 

 

 

agreement, the SunTrust Orlando CLSC department will prepare the

 

 

 

 

modification agreement along with the subordination agreement.

 

 

 

SunTrust will return the signed subordination agreement and/or

 

 

 

 

modification agreement to the closing attorney/settlement agent to be

 

 

 

 

included in the closing package.

 

 

 

 

Note: FedEx is the only overnight carrier SunTrust will use.

 

 

 

 

 

 

 

 

 

 

 

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 17 of 22

Broker Seller Guide

 

 

 

 

 

Automatic Subordination Process for Virginia Properties

General • Automatic subordinations are eligible on any real estate property subject to a subordinate lien that is located in the state of Virginia. However, automatic subordinations are not eligible on subordinate liens provided by any federal, state or local government agency.

The state of Virginia allows an “automatic” subordination process, which may be used in certain situations thus eliminating the requirement for a separate subordination agreement.

SunTrust Mortgage will allow this automatic subordination process in lieu of a separate subordination agreement when the conditions set forth in the Virginia Code are met.

Virginia automatic subordinations may be used with any lenders second mortgage provided all applicable state requirements are met.

Requirements for the Automated Process

The property being refinanced must meet ALL of the following conditions to be eligible for the automatic subordination process:

The property is a 1-unit primary residence only.

The property is an improved platted subdivision lot, townhouse or single family residence on acreage.

The prior mortgage and subordinate deeds of trust encumbers the subject property only (i.e., no additional properties are allowed).

The subordinate deed of trust secures an ORIGINAL PRINCIPAL AMOUNT of $150,000 or less.

The refinance mortgage cannot secure more than the current balance plus $5,000. Cash-out refinances are ineligible for this automatic procedure.

The new first mortgage interest rate cannot exceed the interest rate on the Note of the prior mortgage, and the refinance deed of trust must state the interest rate.

The refinance deed of trust includes the following language inserted (with all blanks completed) on the first page in bold or capitalized letters in order to automatically subordinate the existing second deed of trust:

Conventional, FHA and VA Security Instruments

“THIS IS A REFINANCE OF A DEED OF TRUST RECORDED IN THE CLERK’S OFFICE, CIRCUIT COURT OF ________________________, VIRGINIA, IN DEED BOOK

_________, PAGE ______, IN THE ORIGINAL PRINCIPAL AMOUNT OF

$_________________, AND WITH THE OUTSTANDING PRINCIPAL BALANCE WHICH IS

$_______________________ AT __________%. THE INTEREST RATE ON THIS

REFINANCE DEED OF TRUST IS __________%."

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 18 of 22

Broker Seller Guide

 

 

 

 

 

Automatic Subordination Process for Virginia Properties, Continued

Procedures for Follow the steps below to complete an automatic subordination request for an existing Subordinations SunTrust second lien on a Virginia Property.

of Virginia

Properties

 

Steps

Actions

 

 

1

The Broker will complete the Virginia Automatic Subordination Checklist

 

 

 

(BRO 1360) to determine that it is an allowable transaction.

 

 

 

The Broker should include the completed Virginia Automatic Subordination

 

 

 

Checklist (BRO 1360) form in the loan file to alert the underwriter NOT to

 

 

 

condition for a Subordination Agreement.

 

 

 

The SunTrust Wholesale Processing Center - Underwriter must also

 

 

 

validate and sign the checklist.

 

 

2

The Virginia Automatic Subordination Checklist (BRO 1360) will require the

 

 

 

branch to obtain following information in order to add to the refinance deed

 

 

 

of trust:

 

 

 

Deed Book and page of the original mortgage (obtain from the title

 

 

 

binder)

 

 

 

The original principal amount of the original mortgage (obtain from the

 

 

 

title binder, from borrower’s closing documents on original mortgage or

 

 

 

from current mortgagee).

 

 

 

The outstanding principal balance of the mortgage to be paid off

 

 

 

(obtain from payoff statement).

 

 

 

The interest rate of the mortgage to be paid off (obtain from closing

 

 

 

documents from original mortgage or from current mortgagee).

 

 

 

The interest rate of the new mortgage.

 

 

 

The recording of the new deed of trust with the additional language (as

 

 

 

previously outlined in the “Requirements for the Automated Process”

 

 

 

subtopic) will automatically subordinate the existing second to the new first

 

 

 

lien.

 

 

3

The SunTrust Post Closing department will notify the originating Wholesale

 

 

 

branch if the Virginia Automatic Subordination process was used in error

 

 

 

and whether correction procedures to subordinate the existing second lien

 

 

 

are required.

 

 

 

The Post Closing department will initiate the correction process and any

 

 

 

costs for the correction will be charged to the originating Wholesale branch

 

 

 

office.

 

 

 

 

 

 

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 19 of 22

Broker Seller Guide

 

 

 

 

 

Automatic Subordination Process for Virginia Properties, Continued

Title Insurance Requirements

The SunTrust Mortgage Wholesale Branch MUST contact the Title Company prior to closing when the new first lien is an ARM, to ensure this is acceptable to the title company.

The Title Binder (Commitment for Title Insurance) should appear with the following information:

SCHEDULE B – PART I

Binder should have the refinance deed of trust reflect the following language:

FIRST Deed of Trust from ______________ securing your loan IN THE AMOUNT OF $_________ PAYABLE TO __________

SECOND Deed of Trust from ____________ securing your loan IN THE AMOUNT OF $_________ PAYABLE TO ___________

SCHEDULE B – PART II

(subordinate matter) Binder should have the subordinate deed of trust reflect the following language:

Deed of Trust from John and Mary Homeowner to _________, Trustee(s), dated

_______, recorded in the Clerk’s Office, Circuit Court, ________ County/City, VIRGINIA in Deed Book _____, page _____ to secure $________, payable to __________; and subordinated to the insured deed of trust by Virginia Code

§ 55-58.3.

____ IF THIS LINE IS CHECKED, THERE IS AN OUTSTANDING SUBORDINATE

DEED OF TRUST IN AN AMOUNT NOT EXCEEDING $150,000 SECURED BY THE PROPERTY DESCRIBED IN THIS DEED OF TRUST, WHICH CONTAINS NOT MORE THAN ONE DWELLING UNIT.”

NOTE: THE ABOVE IS A SUBORDINATE MATTER AND WILL APPEAR AS AN EXCEPTION, ITEM 1, SCHEDULE B – Part II ON THE FINAL TITLE POLICY.

The subordinate deed of trust will appear as an exception on Schedule B – Part II of the final title policy.

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 20 of 22

Broker Seller Guide

 

 

 

 

 

Automatic Subordination Process for Texas Properties

General

Automatic subordinations are eligible on Texas real estate homestead properties that

 

 

are eligible for a subordinate lien.

 

The state of Texas allows an “automatic” subordination process, which may be used in

 

 

certain situations thus eliminating the requirement for a separate subordination agreement.

 

First mortgage

primary residence

transactions with secondary financing that consists of

 

 

a Home Equity Line of Credit (HELOC) under Texas Constitution, Article XIV, Section

 

 

50(a)(6) are

eligible

for re-subordination,

unless the first mortgage is a Section 50(a)(6)

 

 

loan.

 

 

 

 

SunTrust Mortgage will allow

Texas

automatic subordination process in lieu of a

separate subordination agreement when the conditions set forth in the Texas State Constitution are met (subsequently presented in this section). This includes HELOCs, per the HELOC renewal and extension terms.

Texas automatic subordinations may be used with any lenders second mortgage provided all applicable state requirements are met.

Requirements for the Automated Process

The property being refinanced must meet ALL of the following conditions to be eligible for the automatic subordination process:

The first lien on the subject property cannot be a loan subject to Texas Constitution, Article XVI, Section 50(a)(6) [Texas Cash-Out].

The existing mortgage and subordinate deeds of trust encumber only the subject property (i.e., no additional real or personal property other than the homestead).

The second lien being subordinated may be an existing SunTrust Combo Second Mortgage, or any acceptable pre-existing second mortgage.

Note: Subordinate deeds of trust that meet the criteria of Texas Constitution Article XIV, Section 50(a)(6) Equity Lines of Credit (HELOC) are eligible for re-subordination with a non-50(a)(6) first mortgage, therefore also are eligible for the Texas automatic subordination.

Reference: See the guidelines of the first mortgage loan program for further details regarding the subordination of HELOC secondary financing.

The refinance deed of trust must include all of the following:

The following renewal and extension language must be attached as a rider to the Deed of Trust or included within the deed of trust (with the box checked).

Renewal and Extension of Liens Against Homestead Property.

The Note is in renewal and extension, but not in extinguishment, of the indebtedness described on the attached Renewal and Extension Exhibit which is incorporated by reference. Lender is expressly subrogated to all rights, liens, and remedies securing the original holder of a note evidencing Borrower’s indebtedness and the original liens securing the indebtedness are renewed and extended to the date of maturity of the Note in renewal and extension of the indebtedness.

Assignment of lien from the first lien holder to the refinancing lender (SunTrust Mortgage, Inc); and

The title company has issued a first lien policy for the entire amount of the loan (including closing costs).

Continued on next page

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 21 of 22

Broker Seller Guide

 

 

 

 

 

Automatic Subordination Process for Texas Properties, Continued

Procedures for Follow the steps below to complete an automatic subordination request for an existing Subordinations SunTrust second lien on a Texas Property.

of Texas

Properties

 

Steps

Actions

 

 

1

The Broker will complete the Texas Automatic Subordination Checklist

 

 

 

(BRO 1379) to determine that it is an allowable transaction.

 

 

 

The Broker should include the completed Texas Automatic Subordination

 

 

 

Checklist (BRO 1379) form in the loan file to alert the underwriter NOT to

 

 

 

condition for a Subordination Agreement.

 

 

 

The SunTrust Wholesale Processing Center - Underwriter must also

 

 

 

validate and sign the checklist.

 

 

2

The recording of the new deed of trust with the additional language (as

 

 

 

previously outlined in the “Requirements for the Automated Process”

 

 

 

subtopic) will automatically subordinate the existing second to the new first

 

 

 

lien.

 

 

3

The SunTrust Post Closing department will notify the originating Wholesale

 

 

 

branch if the Texas Automatic Subordination process was used in error and

 

 

 

whether correction procedures to subordinate the existing second lien are

 

 

 

required.

 

 

 

The Post Closing department will initiate the correction process and any

 

 

 

costs for the correction will be charged to the originating Wholesale branch

 

 

 

office.

 

 

 

 

 

Section 1.21

 

October 18, 2013

Subordination of SunTrust Second Mortgages

 

Page 22 of 22

Broker Seller Guide

 

 

 

 

 

Watch Suntrust Subordination Video Instruction

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