For Residents - Loan Payoff & Subordination

Department of Planning and Development
Loan Subordination “CASH-OUT” Policy

Under the following conditions the Department of Planning and Development will subordinate an existing loan/grant to allow recipients to receive cash when refinancing or taking an additional loan on the collateralized property: *

1. The loan/grant is HUD - HOME/Hope.

2. A court has issued a Divorce Decree assigning property equity.
The homeowner recipient desires to maintain ownership of the property. The borrower must provide the Divorce Decree specifying the court ordered equity assignment.

3. Property equity is used to satisfy a municipal lien.
The recipient must agree - prior to subordination - to a modification of their loan requiring automatic monthly payments at the current market interest rate (as determined by Rhode Island Housing for a standard home improvement loan) if the municipal lien is not satisfied within 30 days of the equity loan closing.

4. Property equity is used to remove municipal code violations.
The recipient must agree – prior to subordination – to a modification of their loan requiring automatic monthly payments at the current market interest rate ( as determined by Rhode Island Housing for a standard home improvement loan) if the municipal code violation is not cured within 180 days of the equity loan closing. Prior to subordination the recipient must provide the official Notice of Violations and a signed contract from a licensed Rhode Island contractor covering all of the work necessary to cure the code violations. The recipient must provide a certificate from the Department of Inspections and Standards confirming the property is free of violations after completion of the work.

5. Property equity is used to modify the property for owner-occupied elderly or handicapped use.
The recipient must agree – prior to subordination – to a modification of their loan requiring automatic monthly payments at the current market interest rate (as determined by Rhode Island Housing for a standard home improvement loan). Prior to subordination the recipient must provide a signed contract from a licensed Rhode Island contractor covering all of the modification work required.

The modifications must be directly related to handicapped living/ elderly comfort and completed within 180 days.

At completion of the work, the recipient must call the DPD housing inspection to certify completion.

05.26.05

*All subordination requests must meet the existing “CASH-OUT” SUBORDINATION REQUIREMENTS.