Lien Release or Subordination

Competitive Affordable Housing Program (AHP) and Down Payment Product (DPP) grants for owner-occupied units are subject to a 5-year retention period, requiring a lien through an FHLB Des Moines (the Bank) approved Retention Agreement.  

The form of Retention Agreement used by the Bank is a Deed Restriction. The form used by the FHLB Seattle prior to its merger with the Bank is a Deed of Trust or Mortgage.  Responsibility for servicing the Retention Agreement lies with: 

  • A Deed Restriction will be serviced by the “Lender” named in the document, typically a member financial institution or a sponsor organization delegated by the member.  
  • A Deed of Trust or Mortgage will be serviced by the Bank as successor to the FHLB Seattle, which is typically named as “Beneficiary”. 

Please see the following instructions for lien releases, repayment, or subordination of liens. If you have any questions or require assistance after review of instructions, please contact the Community Investment Department at 800.544.3452, ext.2400.

Instructions for Lien Releases, Repayment or Subordination

  • Release of Expired Lien

    If it is more than five years past the date of the Retention Agreement it may be released.  To release a lien once the retention period has ended, work with the Lender or with the Beneficiary named on the Retention Agreement.  For forms which show a Beneficiary, please work with our Community Investment Department by sending a copy of the recorded Retention Agreement and forms for release to communityinvestment@fhlbdm.com, or call Community Investment at 800.544.3452, ext. 2400 for assistance. 

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  • Notice of Foreclosure or Death of Borrower

    In the event of a foreclosure, deed in lieu of foreclosure, or assignment of an FHA insured first mortgage to the Secretary of HUD, the Retention Agreement is terminated and may be released. In the event of the death of the owner(s) of the unit subject to lien, the Retention Agreement is terminated and may be released. 

    Use the form “Notice of Foreclosure or Death of Borrower” to provide FHLB Des Moines (the Bank) notice of a foreclosure or death of the borrower. Instructions for release of lien in the event of death of the borrower are included in the form.     

    Notice of Foreclosure or Death of Borrower
     

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  • Request for Forgiveness of Repayment (at Sale)

    In the event of sale, transfer, assignment of title or deed, or refinance of the assisted unit during the term of the lien, the borrower may be required to repay the unforgiven portion of the lien from any net proceeds, unless the unit is sold or transferred to another low-or-moderate income household. FHLB Des Moines (the Bank) will require that this determination be made before any calculation of repayment. 

    Use the linked form “Request for Forgiveness of Repayment” to determine if repayment is required. Instructions for release of lien in the event of forgiveness at sale are included in the form. If there is no forgiveness, use the “Repayment Calculation Form” to calculate and remit repayment to the Bank.

    Please allow up to five business days for an initial response to a forgiveness or repayment request.

    Request for Forgiveness of Repayment

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  • Subordination of Lien (at Refinance)

    In the event of refinance of the assisted unit during the term of the lien, the borrower may be required to repay the unforgiven portion of the lien from any net proceeds at refinance, unless the unit continues to be subject to the FHLB Des Moines (the Bank’s) lien by means of a Subordination Agreement. Lenders named in a Deed Restriction may use the form “Subordination Agreement” to subordinate the lien.  If the lien is in the form of a Deed of Trust or Mortgage that names the FHLB Seattle or the Bank as Beneficiary, the Bank will provide subordination using this form upon request.  If the form is not acceptable to the new mortgage lender or for use in the local jurisdiction, please provide alternative form to the Bank for review and execution. The Bank reserves the right to approve the content of the subordination form. Send request for subordination to the Community Investment Department at: communityinvestment@fhlbdm.com. Include a copy of the recorded Retention Agreement. If there is no subordination, use the “Repayment Calculation Form” (link) to calculate and remit repayment to the Bank.

    Subordination Agreement
     

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  • Repayment Calculation Form/Capital Improvements Credits

    In the event of a sale, transfer, or assignment of title or deed of the assisted unit where there is no forgiveness, or a refinance where there is no subordination, it may be necessary to repay to FHLB Des Moines (the Bank) the unforgiven portion of the lien from any net proceeds upon sale, transfer, assignment of title or deed, or refinance. 

    Exceptions include: 

    The remaining subsidy amount is $2,500 or less; or

    The net proceeds from the sale are $2,500 or less.

    If an exception applies, the Bank’s lien may be released without repayment. 

    Household's investment, including any capital improvements made by the owner, will reduce net proceeds and may allow for total grant forgiveness.

    Use the “Repayment Calculation Form” to calculate the amount of repayment due. Repayment Calculation Forms must be approved by the Bank prior to closing. All forgiveness and repayment amounts must also be approved by the Bank prior to remitting repayment to the Bank.

    Please allow up to five business days for an initial response to a forgiveness or repayment request.

    Repayment Calculation Form

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