Wells Fargo Subordination Agreement Checklist: A Comprehensive Guide for Borrowers and Lenders

When it comes to real estate transactions, subordination agreements play an essential role. A subordination agreement allows a lender to prioritize their lien on a property over other liens. This is especially crucial when a borrower is looking to refinance their mortgage or take out a second mortgage. In such cases, a subordination agreement is required to ensure that the new lender is protected. Wells Fargo, one of the largest mortgage lenders in the US, has a comprehensive subordination agreement checklist to help borrowers and lenders navigate the process. In this article, we’ll take a closer look at the Wells Fargo subordination agreement checklist and what it entails.

What is a subordination agreement?

A subordination agreement is a legal document that allows a lender to give up their priority position on a property`s title to another lender. The new lender will then take the first lien position on the property. This process is essential in real estate transactions where a borrower is taking out a second mortgage or refinancing their existing mortgage. Without a subordination agreement, the new lender would be second in line to receive payment if the borrower defaults on their loan. This puts the new lender at risk and makes it difficult for them to recover their investment.

Wells Fargo subordination agreement checklist

Wells Fargo has a comprehensive subordination agreement checklist, which outlines the requirements for a successful subordination agreement. The checklist includes the following:

1. Mortgage information

This section requires the borrower to provide information about their existing mortgage, such as the lender, loan amount, current interest rate, and monthly payment. The new lender must also provide details about their proposed mortgage, including the loan amount, interest rate, and monthly payment.

2. Property information

This section requires information about the property, such as the address, legal description, and type of property (single-family home, condo, etc.). The borrower must also provide details about any additional liens or encumbrances on the property, such as a second mortgage, home equity loan, or tax liens.

3. Title information

This section requires the borrower to provide information about the title, such as the name of the title company, the type of title insurance policy, and the date of the policy. The borrower must also provide information about any title defects or potential title defects, such as judgments, bankruptcies, or foreclosures.

4. Borrower information

This section requires the borrower to provide personal information, such as their name, address, social security number, and employment status. The new lender must also provide similar information about their borrower.

5. Lender information

This section requires the lender to provide information about their company, such as their name, address, and contact information. The lender must also provide documentation of their lien position on the property.

Benefits of a Wells Fargo subordination agreement

A Wells Fargo subordination agreement provides several benefits for both lenders and borrowers. For lenders, a subordination agreement ensures that their lien position is protected, even if the borrower defaults on their loan. This makes it easier for lenders to recover their investment in the event of a default. For borrowers, a subordination agreement allows them to access additional funds without having to pay off their existing mortgage. This makes it easier for them to make home improvements or pay for education expenses.

Conclusion

In conclusion, a subordination agreement is a critical component of real estate transactions, especially when a borrower is looking to take out a second mortgage or refinance their existing mortgage. The Wells Fargo subordination agreement checklist provides a comprehensive guide for borrowers and lenders to follow, ensuring a successful transaction. By understanding the requirements of a subordination agreement and following the Wells Fargo checklist, borrowers and lenders can protect their investments and achieve their financial goals.