BMR subordination

At any time following home purchase, Purchase Assistance Loan (PAL) borrowers may request that the city subordinate to a refinanced senior mortgage(s). If the borrower chooses to refinance, he/she must either pay off the PAL loan or meet PAL Program requirements for subordination to a new senior mortgage(s).

Requirements

Per the Purchase Assistance Loan Program Guidelines, the PAL loan will subordinate to a refinanced senior mortgage(s) if the borrower meets all of the following conditions / requirements:

• The refinancing of the existing senior mortgage(s) is for the purpose of reducing monthly housing expenses
• The refinancing is for no more than the amount of the balance of the senior mortgage(s) plus the cost of refinancing
• No cash will be taken out of the refinance
• There is sufficient equity in the property so the total loans-to-value is at the same amount after the refinance as it was when the property was purchased

If all four conditions above are applicable, the owner should contact the the City to start the subordination process. The City will provide the lender a letter stating the Below Market Rate (BMR) restricted value of your home and any other documentation requested. Sample subordination and program documents are available for lenders upon request to help determine if the first loan can work in conjunction with the City of Menlo Park's BMR program.