I am currently speaking to the bank holding our second mortgage about refinancing our first mortgage. The bank told me that they will not sign the subordination agreement for the refinance if I do not agree to a 1% rate increase on the second mortgage, and a 1.5% increase if it is done by another bank. I understand that they can charge a processing fee or refuse to sign the agreement, but can they require me to modify the interest rate in order to obtain the agreement? This seems like extortion.
The use of a subordination agreement means that a lender who has a superior lien to someone else will allow that subordinate lender to jump ahead of them. If you have a first and second mortgage, only the first can subordinate. If the second lienholder is going to refinance the first, he will have both first and second. They will have two loans. Obtaining just one loan. There is no subordination and you'll have one payment; otherwise, there is no requirement on a lender to allow a subordination, and your states usury laws will dictate what rates and fees may be charged.
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The use of a subordination agreement means that a lender who has a superior lien to someone else will allow that subordinate lender to jump ahead of them. If you have a first and second mortgage, only the first can subordinate. If the second lienholder is going to refinance the first, he will have both first and second. They will have two 