Plain-language definition
What does Subordination agreement mean?
An agreement by which one creditor postpones its priority to another creditor.
Practical significance
Why it matters in a mortgage file
It matters because the cause, severity, recency and recovery can change lender category, pricing and required equity.
The exact treatment depends on the lender, property, borrower profile, transaction structure and governing documents. A term used conversationally may be narrower or broader than the meaning used in a commitment, registered charge, appraisal, insurer guideline or statute.
For the broader transaction framework, read Credit Assessment.
Underwriting perspective
How professionals apply the concept
In underwriting, subordination agreement is not reviewed in isolation. The professional must identify the source document or policy controlling the term, verify the underlying facts, assess how it affects risk or qualification, and document any exception or assumption. For legal, tax, accounting or appraisal questions, the appropriate professional's opinion should control.
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This entry is general educational information. Mortgage rules and lender policies can change, and the result depends on the complete application and transaction. It is not legal, tax, accounting, appraisal, investment or financial advice.