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.
Question | Answer |
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Form Name | Suntrust Subordination |
Form Length | 22 pages |
Fillable? | No |
Fillable fields | 0 |
Avg. time to fill out | 5 min 30 sec |
Other names | sun trust subordination acknowledgement and agreement, suntrust subordinatino acknowlegement and agreement, suntrust subordination acknowledgement and agreement, suntrust subordination |
Section 1.21 – Subordination of SunTrust Second Mortgage Loans
In This Section This section contains the following topics. |
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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 |
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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, |
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select the applicable year below. |
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2013 |
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2012 |
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2011 |
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2010 |
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2009 |
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Section 1.21 |
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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 |
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off with the proceeds of the new first mortgage are eligible for subordination in |
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accordance with the guidelines outlined in this document. |
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Note: In all cases where an existing SunTrust Combo or EZ Two second mortgage lien |
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is not being paid off with the proceeds of the new first mortgage, the second lien MUST |
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remain in second lien position. |
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• The existing SunTrust Combo and EZ Two second mortgage MUST be subordinated |
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behind a NEW SunTrust first mortgage. The existing SunTrust Combo and EZ Two |
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second mortgage CANNOT be subordinated behind a |
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loan. |
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Notes: |
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• SunTrust Combo second mortgage loans are identified by a ten (10) digit loan |
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number. |
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• The EZ Two second mortgage is also assigned a ten (10) digit loan number. |
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• The new first mortgage product must allow for the subordination of an existing SunTrust |
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second lien. |
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Reference: See the “New First Mortgage Requirements” subtopic subsequently |
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presented in this document for additional information regarding new first mortgage |
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product restrictions. |
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• Additionally, the new LTV/TLTV must meet the more restrictive of the specific new first |
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mortgage guidelines or the guidelines outlined in this document. |
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Reference: See the applicable first mortgage product description for secondary |
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financing guidelines. |
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• Any loans subject to a SunTrust Combo or EZ Two Second Mortgage subordination |
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must be submitted to SunTrust for underwriting and approval. |
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• SunTrust Mortgage, Inc. (i.e., SunTrust underwriter or contract MI underwriter on the |
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behalf of SunTrust) must approve the subordination request at the same time the new |
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first mortgage is approved. |
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• A subordination agreement is required to assure the second lien remains in second lien |
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position. |
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Notes: |
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• For existing SunTrust Combo and EZ Two second mortgages, the subordination |
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agreement is drafted by the closing attorney/settlement agent. |
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• The subordination agreement is executed at the closing of the new first mortgage |
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and is recorded with the first mortgage documents. |
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Continued on next page |
Section 1.21 |
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Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued
Eligible |
The following occupancy/property types are eligible for subordination: |
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Occupancy/ |
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Property Types |
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primary residences, |
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second homes, |
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investment properties, |
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• leasehold properties (excluding Georgia Power leaseholds), |
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modular housing, |
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• properties in excess of 10 acres, |
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• warrantable condominiums, including condominium conversions, and |
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warrantable PUDs. |
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Ineligible |
The following occupancy/property types are ineligible for subordination: |
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Occupancy/ |
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Property Types |
condotels, |
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cooperatives, |
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Georgia Power leaseholds, |
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manufactured housing, |
•
•
• 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.
•
Continued on next page
Section 1.21 |
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Subordination of SunTrust Second Mortgages |
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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
•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
Existing |
The existing Combo or EZ Two second must be current and cannot have any |
Combo and EZ |
payments within the last 12 months. |
Two Second |
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Mortgage |
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Requirements |
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Geographic |
References: |
Restrictions |
• See the applicable new first mortgage product description and Section 1.11: Geographic |
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State Restrictions of the Broker Seller Guide for specific geographic restrictions that may |
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apply. |
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• If the subject property is located in the state of Virginia, see the “Automatic Subordination |
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Process for Virginia Properties” topic subsequently presented in this document for |
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information on the state of Virginia’s automatic subordination procedures. |
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• If the subject property is located in the state of Texas, see the “Automatic Subordination |
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Process for Texas Properties” topic subsequently presented in this document for |
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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
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Continued on next page |
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Section 1.21 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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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 |
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for secondary financing for the new first mortgage product [including, but not limited to |
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minimum credit score, maximum |
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requirements, etc.]. |
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Reference: See the applicable first mortgage product description for secondary |
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financing guidelines. |
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• 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.
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Reference: See Section 1.17: SunTrust Mortgage Declining Market Guidelines of the |
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Broker Seller Guide for additional information. |
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Maximum Number of Financed Properties |
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Reference: See Section 1.20: Maximum Number of Financed Properties and Borrower |
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Exposure of the Broker Seller Guide for guidelines. |
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Note: The maximum total exposure is $2.5 million dollars on all SunTrust balance sheet |
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(Portfolio) loan products (INCLUDING any existing SunTrust Bank or SunTrust Mortgage |
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seconds being subordinated). |
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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. |
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• Fannie Mae’s Property Inspection Waiver (PIW), Freddie Mac’s Property Inspection |
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Alternative (PIA), Freddie Mac Form 2070, Freddie Mac Form 2055, and automated |
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valuation models (AVMs) are NOT acceptable. |
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Continued on next page |
Section 1.21 |
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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 |
1• It 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
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 |
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Subordination of SunTrust Second Mortgages |
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Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued
Procedures for Subordination Request, (continued)
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Step |
Action |
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1 (cont.) |
• If the Combo or EZ Two loan being subordinated is a MERS (Mortgage |
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Electronic Registration System) loan, the subordination agreement must |
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be prepared in the name of MERS. |
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• The settlement agent must insert the following verbiage in the |
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Subordination Agreement: |
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• "MERS" is Mortgage Electronic Registration Systems, Inc. MERS is a |
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separate corporation that is acting solely as a nominee for Lender |
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and Lender’s successors and assigns. MERS is organized and |
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existing under the laws of Delaware, and has a mailing address of |
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P.O. Box 2026, Flint, MI |
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E. Voorhees Street, Suite C, Danville, IL 61834. The MERS |
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telephone number is (888) |
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RECORDING THIS DOCUMENT MERS IS THE MORTGAGEE OF |
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RECORD. |
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Note: SunTrust Mortgage, Inc will NOT subordinate to a 3rd lien position. |
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Continued on next page |
Section 1.21 |
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Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued
Procedures for Subordination Request, (continued)
Step |
Action |
2• The 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
SunTrust Mortgage
1001 Semmes Avenue
Mail Code
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
•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 |
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Subordination of SunTrust Second Mortgages |
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Page 9 of 22 |
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Subordination of SunTrust Combo and EZ Two Second Mortgage Loans, Continued
Procedures for Subordination Request, (continued)
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Step |
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Action |
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3 |
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• Once the subordination agreement has been executed at closing, the |
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closing attorney/settlement agent should include the recorded |
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Subordination Agreement in the closed loan package that is sent back to |
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SunTrust at the following address: |
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SunTrust Mortgage |
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1001 Semmes Avenue |
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3rd Floor |
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Mail Code |
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Attn: Final Docs |
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Richmond, VA 23224 |
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Note: A copy of the executed Subordination Agreement must be retained in |
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the first mortgage loan file. |
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Subordination |
• The |
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subordination agreement must contain the following information when being |
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Agreement |
reviewed by the SunTrust Wholesale Branch for approval: |
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Requirements |
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Names of the parties |
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• Business addresses are currently optional |
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• Description of the subject property (legal description is preferred; however, the |
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address is acceptable) |
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• Identification of the mortgage or trust deed to be subordinated: |
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Names of parties |
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Date of execution |
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• Reference to book and pages of recordation |
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• Identification of encumbrance(s) (legal claim to a property) to be superior in priority |
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Statement of consideration: |
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• Inducement to lender to loan money |
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Payment of Money |
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• Other, but should make clear that some consideration was given |
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• Terms of subordination of the loan (optional). |
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• Covenant of validity of mortgage or trust deed to be subordinated (optional) |
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• Cancellation of subordination provision in mortgage or trust deed (optional) |
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• Words indicating binding effect |
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Date of Agreement |
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• Signatures of borrowers and lender |
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Attestation |
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Acknowledgements (Notary) |
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• 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 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 10 of 22 |
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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
•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 |
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Turn Time |
For subordinations involving a |
• 3 |
business days for rate/term refinance |
SunTrust Mortgage 1st Lien |
transactions |
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• 5 |
business days for |
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transactions |
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For subordinations involving a |
• Minimum of 10 business days |
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Note: Service levels are determined at the time the Orlando CLSC receives the subordination request and any required documentation.
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Continued on next page |
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Section 1.21 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 11 of 22 |
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Subordination of SunTrust Equity Line and Equity Loans, Continued
Ineligible |
The following occupancy/property types are ineligible for subordination: |
Occupancy/ |
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Property Types |
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• investment properties. |
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Note: If a property type is ineligible based on the first mortgage loan program then the |
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second mortgage is NOT eligible for subordination. |
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Geographic |
References: |
Restrictions |
• See the applicable new first mortgage product description and Section 1.11: Geographic |
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State Restrictions of the Broker Seller Guide for specific geographic restrictions that may |
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apply. |
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• If the subject property is located in the state of Virginia, see the “Automatic Subordination |
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Process for Virginia Properties” topic subsequently presented for information on the state |
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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
The following table provides the maximum TLTV and the maximum combined loan amounts for equity line subordinations:
Maximum Combined Line/Loan Amount
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Property Type |
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TLTV |
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Single Family |
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Condominium |
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(Townhouse, PUD) |
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60% |
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$2,000,000 |
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$1,250,000 |
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65% |
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$1,750,000 |
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$1,250,000 |
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70% |
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$1,500,000 |
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$1,000,000 |
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75% |
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$1,500,000 |
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$1,000,000 |
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80% |
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$1,500,000 |
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$1,000,000 |
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85% |
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$1,250,000 |
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$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 |
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October 18, 2013 |
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Page 12 of 22 |
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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. |
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Underwriting |
General |
Requirements |
• Unless otherwise published in this document, borrowers must meet all of the guidelines |
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for secondary financing for the new first mortgage product [including, but not limited to |
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minimum credit score, maximum |
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LTV/TLTV/HTLTV, AUS requirements, etc.]. |
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Reference: See the applicable first mortgage product description for secondary |
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financing guidelines. |
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• All subordination requests will require a full |
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recommended that the subordination request be sent to Orlando CLSC at the same |
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time the first mortgage is sent to underwriting. |
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• There may be instances when line modification (lowering of the maximum equity line |
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amount and/or freezing the access to the equity line) is required to approve the |
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subordination request. |
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Note: In a transaction where the borrower receives the lesser of $5,000 or 3% of the |
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new loan amount in cash at closing, the transaction will NOT be considered a “cash- |
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out” transaction. |
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Reference: See the “Service Levels” subtopic previously presented in this topic for |
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additional information regarding underwriting turn times. |
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• Approval of subordinations involving properties secured by condominiums where the |
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TLTV exceeds 85% and a SunTrust 1st mortgage is not in place are not acceptable. |
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Reference: See the “Income Documentation,” “Qualifying Ratio and Payment Guidelines” |
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and “Appraisal Documentation” subtopics subsequently presented in this topic for |
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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.
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Continued on next page |
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Section 1.21 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 13 of 22 |
Broker Seller Guide |
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Subordination of SunTrust Equity Line and Equity Loans, Continued
Underwriting |
Declining Markets, (continued) |
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Requirements, |
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(continued) |
Reference: See Section 1.17: |
SunTrust Mortgage Declining Market Guidelines of the |
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Broker Seller Guide for additional information. |
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Maximum Number of Financed Properties |
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Reference: See Section 1.20: Maximum Number of Financed Properties and Borrower |
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Exposure of the Broker Seller Guide for guidelines. |
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Note: The maximum total exposure is $2.5 million dollars on all SunTrust balance sheet |
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(Portfolio) loan products (INCLUDING any existing SunTrust Bank or SunTrust Mortgage |
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seconds being subordinated). |
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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 |
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transactions. |
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• Self employed borrowers would include borrowers whose commissioned earnings |
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exceed 50% of their income. |
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• 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:
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Monthly Income |
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Credit Score / Max DTI |
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>/= 720 |
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</= $3,000 |
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40% |
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40% |
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$3,001 - $5,500 |
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50% |
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45% |
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$5,501 - $8,000 |
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50% |
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50% |
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> $8,000 |
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50% |
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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 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 14 of 22 |
Broker Seller Guide |
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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 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 15 of 22 |
Broker Seller Guide |
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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
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Steps |
Actions |
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1 |
• The subordination request must be processed through the Orlando |
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Consumer Lending Sales Center (CLSC). |
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• The following documents are required when submitting a subordination |
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and/or modification request: |
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• The Broker must complete the Consumer Loan Subordination |
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Requirements (BRO 0800) form, |
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• Copy of the Application (Form 1003), |
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• Copy of the complete (i.e., all pages) Appraisal (Form 1004) less |
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than 90 days old from the subordination request date, |
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• Copy of the Underwriting Transmittal Summary (Form 1008) or |
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AUS Findings, |
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• Income documentation (if applicable), |
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• Title commitment search – first |
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information) less than 30 days old from the subordination request |
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date, and |
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• Flood Insurance Declaration page (if applicable). |
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Note: CLSC will NOT subordinate to a 3rd lien position. |
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2 |
Orlando CLSC Subordination Department Contact Information |
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• All requests should be faxed to |
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• For questions and/or problems please call |
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• All paper requests may be sent to: |
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SunTrust Bank |
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Subordination Department |
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7455 Chancellor Drive |
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Orlando, FL 32809 |
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3 |
Subordination Fees |
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• There is no subordination fee charged to SunTrust Mortgage for a |
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subordination request behind a SunTrust 1st mortgage. |
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• There is a subordination fee charged to the borrower of $200.00 for a |
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second lien subordination request behind a |
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• The subordination request will not be reviewed until the fee is received. |
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• Any revisions to the first mortgage loan amount will be assessed a |
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revision fee of $50.00 if the request is received within 30 days from the |
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completion date of the subordination approval. Revisions older than 30 |
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days or if the lender’s name changes will be considered a new package |
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and an additional fee of $200 will be assessed. |
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4 |
• SunTrust Orlando CLSC department will notify the requestor of the |
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status of the subordination request. |
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Continued on next page |
Section 1.21 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 16 of 22 |
Broker Seller Guide |
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Subordination of SunTrust Equity Line and Equity Loans, Continued
Procedures for Subordination Request, (continued)
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Steps |
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Actions |
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5 |
• |
SunTrust Orlando CLSC department will draft and prepare the |
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subordination agreement at the time the subordination request is |
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reviewed and approved. |
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• |
If the SunTrust equity line/equity loan requires a modification |
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agreement, the SunTrust Orlando CLSC department will prepare the |
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modification agreement along with the subordination agreement. |
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• SunTrust will return the signed subordination agreement and/or |
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modification agreement to the closing attorney/settlement agent to be |
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included in the closing package. |
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Note: FedEx is the only overnight carrier SunTrust will use. |
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Section 1.21 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 17 of 22 |
Broker Seller Guide |
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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
•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.
•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 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 18 of 22 |
Broker Seller Guide |
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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
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Steps |
Actions |
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1 |
• The Broker will complete the Virginia Automatic Subordination Checklist |
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(BRO 1360) to determine that it is an allowable transaction. |
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• The Broker should include the completed Virginia Automatic Subordination |
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Checklist (BRO 1360) form in the loan file to alert the underwriter NOT to |
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condition for a Subordination Agreement. |
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• The SunTrust Wholesale Processing Center - Underwriter must also |
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validate and sign the checklist. |
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2 |
• The Virginia Automatic Subordination Checklist (BRO 1360) will require the |
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branch to obtain following information in order to add to the refinance deed |
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of trust: |
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• Deed Book and page of the original mortgage (obtain from the title |
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binder) |
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• The original principal amount of the original mortgage (obtain from the |
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title binder, from borrower’s closing documents on original mortgage or |
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from current mortgagee). |
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• The outstanding principal balance of the mortgage to be paid off |
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(obtain from payoff statement). |
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• The interest rate of the mortgage to be paid off (obtain from closing |
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documents from original mortgage or from current mortgagee). |
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• The interest rate of the new mortgage. |
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• The recording of the new deed of trust with the additional language (as |
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previously outlined in the “Requirements for the Automated Process” |
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subtopic) will automatically subordinate the existing second to the new first |
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lien. |
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3 |
• The SunTrust Post Closing department will notify the originating Wholesale |
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branch if the Virginia Automatic Subordination process was used in error |
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and whether correction procedures to subordinate the existing second lien |
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are required. |
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• The Post Closing department will initiate the correction process and any |
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costs for the correction will be charged to the originating Wholesale branch |
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office. |
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Continued on next page |
Section 1.21 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 19 of 22 |
Broker Seller Guide |
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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
§
____ 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 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 20 of 22 |
Broker Seller Guide |
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Automatic Subordination Process for Texas Properties
General |
• |
Automatic subordinations are eligible on Texas real estate homestead properties that |
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are eligible for a subordinate lien. |
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• The state of Texas allows an “automatic” subordination process, which may be used in |
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certain situations thus eliminating the requirement for a separate subordination agreement. |
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• First mortgage |
primary residence |
transactions with secondary financing that consists of |
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a Home Equity Line of Credit (HELOC) under Texas Constitution, Article XIV, Section |
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50(a)(6) are |
eligible |
for |
unless the first mortgage is a Section 50(a)(6) |
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loan. |
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• |
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
•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
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
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 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
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Page 21 of 22 |
Broker Seller Guide |
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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 |
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(BRO 1379) to determine that it is an allowable transaction. |
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|
• The Broker should include the completed Texas Automatic Subordination |
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Checklist (BRO 1379) form in the loan file to alert the underwriter NOT to |
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condition for a Subordination Agreement. |
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• The SunTrust Wholesale Processing Center - Underwriter must also |
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validate and sign the checklist. |
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|
2 |
• The recording of the new deed of trust with the additional language (as |
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|
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previously outlined in the “Requirements for the Automated Process” |
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subtopic) will automatically subordinate the existing second to the new first |
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lien. |
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3 |
• The SunTrust Post Closing department will notify the originating Wholesale |
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branch if the Texas Automatic Subordination process was used in error and |
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whether correction procedures to subordinate the existing second lien are |
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required. |
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• The Post Closing department will initiate the correction process and any |
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costs for the correction will be charged to the originating Wholesale branch |
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office. |
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Section 1.21 |
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October 18, 2013 |
Subordination of SunTrust Second Mortgages |
|
Page 22 of 22 |
Broker Seller Guide |
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