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Subordination Agreement Of Loan

The subordinated loan agreement identifies at least three distinct parties, including the first mortgage lender, the second mortgage lender and the owner of the property. The agreement will also identify security, which is the property that secures mortgages. The first lender subordinates its mortgage to the mortgage of the second lender. Subordination agreements are the most common in the mortgage industry. If a person borrows a second mortgage, that second mortgage has less priority than the first mortgage, but these priorities can be disrupted by refinancing the original loan. A subordination agreement is a legal document that establishes that one debt is ranked behind another in priority for the recovery of a debtor`s repayment. Debt priority can become extremely important when a debtor is in arrears with payments or goes bankrupt.

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