June 13, 2011: Auto-subordination guidelines
For those familiar with Virginia’s auto-subordination guidelines (Code § 55-58.3), there is a very important revision to this code taking effect July 1st. The three existing criteria to comply with the auto-subordination guidelines are:
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A mortgage or deed of trust securing an original principal amount not exceeding $50,000,
- The principal amount secured by such refinance mortgage does not exceed the outstanding principal balance secured by the prior mortgage plus $5,000,
- The interest rate is stated in the refinance mortgage at the time it is recorded and does not exceed the interest rate set forth in the prior mortgage.
Well, back on March 14, 2011, the Governor of Virginia passed HB 1682. HB 1682 “increases to $150,000 from $50,000 the maximum amount of a subordinate mortgage that retains its subordinate status upon the refinancing of the primary mortgage“. For your clients looking to refinance that may have subordinate/secondary financing, this might help alleviate the requirement to obtain a subordination agreement from the secondary Note holder.
Should you have any additional questions, please feel free to contact us at either 757-493-7600 or email us.
