Wisconsin Mortgage Subordination Agreement

Wisconsin Mortgage Subordination Agreement: What You Need to Know

If you`re a homeowner in Wisconsin looking to refinance your mortgage or take out a second mortgage, you might need to sign a subordination agreement. In this article, we`ll explain what a subordination agreement is, why you might need one, and what you should look for when reviewing a Wisconsin mortgage subordination agreement.

What is a Subordination Agreement?

A subordination agreement is a legal document that changes the priority of two or more debts secured by the same collateral. In the context of mortgages, it means that one mortgage lender agrees to subordinate their lien (or right to foreclose) to another lender`s lien. This allows the second lender to take a higher priority position in the event of a foreclosure.

Why Might You Need a Subordination Agreement?

There are a few reasons why you might need a subordination agreement in Wisconsin:

1. Refinancing: If you already have a mortgage and want to refinance it with a new lender, the new lender will want to have the first lien position. This means that they want to be the first mortgage holder in case of a foreclosure. To do this, your current lender will have to subordinate its lien to the new lender`s lien.

2. Second Mortgages: If you`re taking out a second mortgage on your property, the second lender will want to have a lien on the property. However, if you default on your mortgage, the second lender will only be able to foreclose if there is enough equity in the property after the first mortgage is paid off. To protect their investment, the second lender will require the first mortgage holder to subordinate their lien.

3. Commercial Mortgages: In commercial real estate, it`s common for multiple lenders to be involved in financing a property. In this case, a subordination agreement is necessary to establish the priority of each lender`s lien.

What to Look for in a Wisconsin Mortgage Subordination Agreement

If you`re asked to sign a subordination agreement, it`s important to review the document carefully. Here are some things to look for:

1. Lien Priority: The agreement should clearly state the priority of each lien. The first mortgage holder should explicitly subordinate their lien to the second mortgage holder`s lien.

2. Conditions: The agreement should specify the conditions under which the subordination will be lifted. For example, if you refinance your first mortgage again, the second lender may require the first mortgage holder to release their subordination.

3. Fees: Some lenders may charge a fee for subordinating their lien. Make sure you understand any fees associated with the agreement.

4. Defaults: The agreement should specify what happens if you default on your mortgage. If the second mortgage holder forecloses, the first mortgage holder should agree to take a secondary position in the foreclosure.


A Wisconsin mortgage subordination agreement can help you refinance your first mortgage or take out a second mortgage on your property. However, it`s important to review the document carefully and understand the terms of the agreement. If you`re unsure about any of the terms, you should consult with a real estate attorney or mortgage professional. By doing your due diligence, you can protect your investment and ensure a successful outcome for your mortgage transaction.