What are the requirements related to existing subordinate financing?
In accordance with Selling Guide requirements, all existing subordinate financing must be resubordinated to maintain first-lien priority of the new first mortgage originated as a Refi Plus (manual underwriting) or DU Refi Plus transaction. Fannie Mae recognizes that in some cases borrowers may have obtained subordinate financing after origination of the existing first mortgage loan that may not comply with our subordinate financing guidelines per the Selling Guide. Please refer to Announcement 09-37 or updated Selling Guide Section B2-1.1-04 for detailed guidelines related to existing subordinate financing with a Refi Plus or DU Refi Plus transaction. For DU Refi Plus transactions, lenders will receive a reminder message that the subordinate financing must comply with standard Selling Guide provisions.
