Escrow & Title
In Hawaii, what is a 'subordination agreement' in real estate finance?
AA. An agreement where a senior lien holder agrees to become junior to a new lien✓ Correct
BB. An agreement where the buyer agrees to be subject to the seller's existing mortgage
CC. An agreement to reduce the interest rate in exchange for a shorter loan term
DD. A buyer's agreement to be bound by HOA rules
Explanation
A subordination agreement is where a prior (senior) lienholder agrees to have their lien become subordinate to a new lien, commonly used in refinancing when a second mortgage exists.
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