The owner of a property bought through the Good Neighbor Next Door (GNND) sales program, or the predecessor Officer/Teacher Next Door program, and still under the occupancy period requirement, may refinance the first mortgage but must request that HUD subordinate its second mortgage to the new refinance (first) mortgage. HUD will agree to subordination in the following situations:
- Refinancing to HUD's Section 203(k) Rehabilitation program to rehabilitate or improve the home; or
- Refinancing for the purpose of obtaining a lower mortgage interest rate (annual percentage rate) or changing the term of the first mortgage; or
- Refinancing to prevent the borrower from defaulting on the first mortgage.
The closing (or title) agent handling the closing of the new loan should handle the paperwork and details to obtain the subordination.
For more information on subordination, borrowers can view or refer their closing agent to the following HUD website: https://www.hud.gov/program_offices/housing/sfh/nsc/gnndserv
Questions about refinancing and subordination can be directed to HUD's contractor:
ISN Corporation – Western Operations Center
Attention: Secretary Held Loan Servicing
2000 N Classen Blvd Suite #3200
Oklahoma City, Ok 73106
Toll-Free Telephone Number: FHA Resource Center at 1-(800) CALL-FHA (225-5342);
Fax Number: (405) 724-7800, (405) 724-7833 or (405) 724-7854
Borrower inquiries: PCServicing@hud.gov
Requests receiving by email or fax will generally be processed within 5 business days. Requests received by postal mail will generally be processed within 10 business days.