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What does a subordination page stamped cancelled mean?

I have a first, second and third mortgage. All my payments are on time for the first, the second is subordinate, and the third is a government home improvment loan.  The third loan sent me the original paperwork for an emergency home improvement loan after I paid off some medical debt & a credit card (less than $1000).  On the subordination page it says it will not subordinate in certain cases, one specified case is the payoff of consumer debt.  On this same page it is stamped cancelled in red. What does this mean? Is there anything I need to do? Any advice or information is appreciated.

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November 05 2011 - Skyland
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That is a fairly confusing question. Are you trying to get a new loan for emergency repairs? If so, then the holder of your third mortgage may have said they wouldn't let it be placed in front of theirs. In other words they were not willing to be subordinate to the new loan. The fact that they are already subordinate to two loans would be a major concern, and they surely don't want to be subordinate to three loans, and particularly not so you could get a cash out loan to pay off debts, even though that may not be your situation. I'm afraid they don't need a reason to refuse to subordinate. It is solely their prerogative.

It sounds like you may be confused a bit about subordination in general. If you have three loans already, the one that was recorded first is the only one that is not somehow subordinate, already. The third loan is subordinate to the first two loans. The second loan is subordinate to the first loan. If you had a new fourth loan, it would be subordinate to the first three.

I apologize if I have misinterpreted the question,  but no one else was attempting to help, so I gave it a shot. Clarify if you'd like. I'll see if I can help. Maybe others will too.
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November 05 2011
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The people holding the loan answered it on Monday.  They had to consolidate one smaller loan into a bigger one.  You are correct, Thank you!
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November 08 2011
I'm still a little confused. Subordinating isn't something the Lender would do to you. It is something they would do for you. It essentially means we will let you put a new loan in front of ours in line. If you have three mortgages, and God forbid, your house got foreclosed on, the Lenders get paid in the order of their position. If your loans totaled  $150K, and house sold for $140k, someone's loan would go unpaid. This is why position matters and subordination is only allowed by Lenders if, and when, it makes sense to them.


What you potentially need to do now is try to refinance all three loans in to one first mortgage. Then you wouldn't have two subordinate mortgages, that are at higher rates than the first mortgage, presumably.

I'm about to step out for the evening. I hope this helps. I'll check and see when I get home.
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November 05 2011
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Yes, I'm new to what subordination or lien means. This third loan has already closed and the money has already been spent on repairs.  "In other words they were not willing to be subordinate to the new loan." So this means they usually won't ask to be paid until any financial changes to the house have been made (ie foreclosure, refinance, or mortgage payoffs), correct?  That sounds reasonable.
What is the worst case scenario, if all else on my part stays the same (ie no foreclosure, defaults, refinancing...)?   
Thank you so much for your reply Hamp!
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November 05 2011
 
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What does a subordination page stamped cancelled mean?
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November 08 2011 | 4 answers
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