Subordination Policy/Refinancing

Policy Terms


With respect to the HOMEBuyers Purchase Program, the City of East Orange has been structured with an exceptional focus on benefiting the homebuyer, thus improving their equity position in the home over time. The City of East Orange has established the following with the allowance for case-by-case alterations, for HOME subsidies supporting homeowners:
  • Only one condition of subordination by the City of East Orange to second position will be approved - in the instance that the HOME-assisted homeowner refinances the property to improve his/her primary mortgage interest rate.
  • The second mortgage may be subordinated to second position to the primary lender.
  • The City of East Orange will not consider subordination for the following types of loans: equity, revolving, cash out, or others loans of any kind. (There may be a consideration of a cash out loan, if the funds are being used to rehabilitate the property).
  • The City of East Orange under any circumstances will consider no other subordination position.
  • The full repayment of the HOME subsidy to the City of East Orange will be required if the homeowner does not remain the principal resident of the home which was provided a HOME subsidy.
  • The enforcement vehicle for this policy will be the second mortgage placed as a lien on the subject property.

Release From Policy


Release from this policy can only occur after the homeowner satisfies the full loan repayment terms as set forth in the Mortgage and Note signed at closing. Policy Effective Date: December 2000

Recapture Option


The City uses the recapture option for this direct subsidy to the homebuyer(s) meaning that whenever the property is sold or title transferred, the full/entire amount of the loan is due at a 0% interest rate.

Compliance


The City of East Orange hereby certifies that its policy for its recapture provision under the HOME program complies with the Section 92.544 of the Final Rules that pertain to recapture versus resale provisions.