Digital Federal Credit Union (DCU) is a financial institution that provides its members with various financial services. One of these services is the subordination agreement, which allows a borrower to prioritize a specific debt over another debt in case of a foreclosure or bankruptcy.
A subordination agreement is a legal document that changes the priority of liens on a property. Usually, when a property is financed, such as with a mortgage, the lender has the first lien on the property. This means that if the property is foreclosed or sold, the lender will receive its money before any other creditors. However, sometimes a borrower may have another debt that they want to prioritize over the mortgage. This is where a subordination agreement comes in.
In a subordination agreement, the borrower agrees to make the debt they want to prioritize subordinate to the mortgage. This means that if the property is foreclosed or sold, the mortgage lender will receive its money first, and the borrower`s other debt will be paid from the remaining funds.
DCU offers subordination agreements for its members who have a mortgage with them. The purpose of this agreement is to help borrowers refinance their mortgages while still maintaining the priority of their other debts. This can be especially useful if a borrower wants to take advantage of lower interest rates by refinancing their mortgage but also wants to maintain their other debts` priority.
To apply for a subordination agreement with DCU, a borrower must complete an application and submit it with all necessary supporting documentation. The agreement will be reviewed by DCU and the mortgage lender to ensure that it is in compliance with all state and federal regulations.
In conclusion, a subordination agreement is a legal document that can help borrowers prioritize their debts in case of foreclosure or bankruptcy. DCU offers subordination agreements to its members with mortgages to help them refinance while still maintaining the priority of their other debts. If you are a DCU member and are interested in a subordination agreement, contact them to learn more about the process.
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