Escrow & Title
What is a 'subordination agreement' in Oregon real estate financing?
AA court order reducing a lien's priority
BA voluntary agreement where a lienholder with higher priority agrees to let their lien become junior to a new or refinanced loan✓ Correct
CAn agreement between buyers and sellers on closing costs
DAn escrow instruction reducing the earnest money amount
Explanation
A subordination agreement is used when a senior lienholder voluntarily agrees to make their lien junior to a new loan. For example, if an Oregon seller has a purchase money second mortgage, the seller may sign a subordination agreement allowing the buyer's new first mortgage lender to hold the senior position. Without subordination, lien priorities follow the recording date (first in time, first in right).
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