Escrow & Title

What is a subordination agreement in Nevada real estate financing?

AAn agreement by a junior lienholder to maintain their priority position

BAn agreement by a junior lienholder to accept a lower priority position behind a new senior loan✓ Correct

CA lender's agreement to reduce the interest rate

DA title company's agreement to provide insurance below standard rates

Explanation

A subordination agreement allows a junior lienholder to voluntarily accept a lower priority position. This is often required when refinancing a first mortgage so that the new first loan takes priority over an existing second mortgage or deed of trust.

People Also Study

Key Terms to Know

Deed of Trust

A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.