Subordination Guidelines for MFA Down Payment Assistance Loans
Subordination Guidelines for MFA Second Mortgage Loan Products
(HELP, HOME Rehab, HOME Payment$aver, Mortgage Booster DPA, HERO DPA, Tax Credit Loan and NSP)
The New Mexico Mortgage Finance Authority (MFA) second mortgage loan products are designed to provide first-time homebuyers with an opportunity to purchase a home in cases where the homeowner does not have cash funds available for the down payment and closing costs required to purchase a home or to provide rehabilitation of a home.
These loan products are repaid through various methods which include: due on sale, transfer or refinance, monthly payments and compliance term forgiveness. (Repayment terms as described in the original, executed, mortgage documents.) Repayment under the terms of your mortgage instrument is for the purpose of recycling the funds to assist additional first-time homebuyers in purchasing their home as well as required compliance to program guidelines. Because of these requirements MFA would not normally authorize a subordination of any MFA second mortgage loan product, however given the current drop in mortgage interest rates, MFA will review a request for subordination where the following guidelines are met.
- A FHA streamline refinance of the first mortgage, or
- A refinance for the purpose of a rate reduction only.
- Absolutely no “cash out”.
- Interest rate reduction must be at least 1 percent.
- New interest rate must be a fixed rate.
- The closing costs do not exceed 3% of the new loan amount.
- The refinance should benefit the borrower by allowing a current market rate first mortgage and/or lowering the current first mortgage interest rate, payment or term of the loan.
- Property MUST BE owner occupied – no exceptions.
- Payments on MFA loan must have been made in a timely manner for the 12 months prior to Subordination request (no more than 2 payments 30 days late and no payments 60+ days late).
- Borrower vesting must be identical to original documents. If not, subject to further review by MFA on a case-by case basis.
- MFA subordination is limited to one (1) approval for the term of MFA second mortgage.
Submission Requirement - MFA must receive:
- Contact information of person/lender submitting the package.
- Written request from the borrower explaining the purpose for the request.
- Copy of MFA’s existing recorded second mortgage.
- Copy of the existing first lien documents – signed Note and recorded Mortgage.
- Copy of payoff quote on current 1st mortgage.
- Copy of the completed loan application, TIL, Good Faith Estimate showing all anticipated costs/fees.
- All pertinent loan information on the new first mortgage that MFA is subordinating.
Submit the package to MFA via fax (505) 243-3289 or contact MFA Mortgage Servicing Department at (505) 843-6882 to submit via E-Mail.
**PLEASE NOTE: A $100.00 subordination fee is due MFA at the time of closing and may be included in the closing costs. Please instruct the title company to remit directly to MFA
- Within seven (7) to ten (l0) business days, lender will receive an approval/denial letter or request for additional information from MFA.
- If the request for subordination is approved, MFA will complete and execute a Subordination Agreement ONLY upon receipt of the new first mortgage information. This information is required in order to prepare our Subordination Agreement.
- Please allow up to two (2) business days for preparation of the Subordination Agreement.
- Lender/title company is responsible for recording the original Subordination Agreement and forwarding recorded original to:
344 4th Street SW
Albuquerque, NM 87102.