Loan Subordination

Ogden City Subordination Guidelines (pdf)

Upon written request, Ogden City may consider the subordination of a loan for refinancing proposals that will not seriously impact the affordability of the property or security of the public investment. The following criteria are utilized to determine if the City will subordinate its loan to another lending institution. The policy to grant subordination is based on the following criteria:

1. There must be an identified reasonable need to lower monthly payments/interest rate or terms.

2. The subordination is subject to a review of borrower’s expense to income ratio to ensure the new mortgage is sustainable and affordable. An expense to income ratio (after the new loan) that exceeds 50% is determined to be unsustainable and is not eligible for subordination.

3. Adjustable-rate mortgages, balloon payment mortgages and interest only mortgages are not allowed.

4. The borrower must continue to occupy the home as their primary residence, if required by the city’s loan terms.

5. Property taxes must not be delinquent.

6. The borrower can only receive “cash out” for home improvement loans or emergency non-insured property damage. Funds disbursed to the borrower during a refinance may be allowed for home repairs of a nature that will help protect the health, safety, and longevity of the structure. Funds for home repairs are required to be held in escrow by the Lender or Title Company to ensure repairs are performed by a licensed contractor.

7. There must be sufficient equity in the property to cover all proposed and existing loans.

8. Any other “cash out” requests, including but not limited to, bill consolidation loans, line of credit, future advance, personal loans, medical collections, other mortgages or encumbrances or liens will not be considered.