Understanding UCCs

UCC Basics

If you’re visiting this page, you’re likely looking for more information about something called a “UCC” filing and how it relates to your loan with Salal. A UCC (Uniform Commercial Code) filing allows Salal and many other lenders to “secure” their loans, by setting up specific property as collateral against the loan. Securing loans helps our members get approved more often and allows us to offer them lower rates.

If you plan on refinancing or selling your home, knowing how to handle the UCC filing on your property can help you avoid delays. We’ve collected some of our most frequently asked questions about UCCs to help homeowners understand what they are (and aren’t) and what to do if they are selling or refinancing their home.

This is provided for informational purposes only and not to be considered legal advice. Neither Salal Credit Union nor its employees provide legal advice. If you have questions, you should refer to your attorney.

What is a UCC?

What exactly is a UCC?

UCC stands for “Uniform Commercial Code.” A UCC financing statement is a public document that Salal files with the county government where your home or other property is located. Salal uses a UCC financing statement to place a lien on the items or upgrades you financed through us. This means that Salal has a legal claim on these items or upgrades until the loan is paid in full. It does not mean Salal has a legal claim against title to your home.

A UCC secures the loan allowing us to offer you a lower interest rate than we could offer without a UCC, saving you money as you pay off your loan. It also allows us to approve more loans to people qualifying for a loan than if the loans were unsecured.

Do I have a UCC filing on my home because I have bad credit?

No. Having a UCC filing on your home does not mean you have bad credit. Salal files a UCC financing statement as a way to secure your loan and provide you with a lower interest rate.

When does Salal file a UCC financing statement?

Salal files a UCC only after a homeowner has signed their final loan documents and the loan has been funded. The speed of this process depends on the county where the UCC is being filed and can vary depending on a given county’s process.

A UCC and Your Home

Why is a UCC showing up on my property title?

When you sign your final loan documents, Salal files a UCC with the relevant government office in the county where your home or property is located. Even though the UCC filing isn’t a lien on title to your house, it is a public record and will reflect on your property title.

Is a UCC financing statement a lien on my home?

No. A UCC financing statement is not a lien on your home. It’s a lien on the equipment or items you have financed through Salal. But it will reflect on your property title. For example, if you buy solar panels through a contractor and finance the purchase through Salal, the UCC lien will be on the solar panels and only the solar panels.

For more information about selling or refinancing your home while you have a UCC filing attached to it, see our answers in the How a UCC Impacts Selling or Refinancing Your Home section below.

Does having a UCC lien mean that Salal can foreclose on my house?

A UCC financing statement is a lien on the equipment or items you have financed through Salal. Salal files a UCC to help secure the loan and protect the credit union and our members from potential losses. In the event that you default on your loan, we may attempt to recover the funds we loaned you by foreclosing against the equipment or items you have financed through Salal.

What happens to a UCC financing statement once my loan is paid off?

Once you have fully paid off your loan with Salal, we will make a request to the county where the UCC is filed to have the UCC removed (in other words, have the lien terminated). Similar to the initial filing and loan subordination process, the time it takes a county to finish the paperwork can vary, depending on that county’s process and staffing situation.

How a UCC Impacts Selling or Refinancing Your Home

What happens if I have a UCC and I want to sell my house?

If you sell your house, you will need to pay off the remaining balance on your Salal loan. Many of our members choose to add the value of the home upgrade or solar system into the sale price of the house. At closing, funds from the sale are collected by the escrow or title company and used to pay off and close your Salal loan.

What happens if I have a UCC and I want to refinance my mortgage?

If you decide to refinance your first or second mortgage, your lender may require you to go through a process called “subordination.” Salal can help you with the subordination process. A UCC Subordination Requirements form is available in the Disclosure & Forms section of our website and inquiries can be sent to Subordinations@SalalCU.org. You can also choose to do your refinance through Salal and make the process even easier. For more information on the loan subordination process, see our answer for “What is loan subordination?” below.

Who do I ask if I have UCC questions during my refinance or while selling my home?

For more information about UCC filings, loan subordination, or refinancing your home with Salal, feel free to call our Virtual Branch at 800.562.5515 or 206.298.9394 (M–F: 9:30 a.m.–5:30 p.m. PT, Sat: 10 a.m.–2 p.m. PT).

How can I get a payoff quote for my loan?

Payoff quotes can be obtained by calling our Virtual Branch at 800.562.5515 or 206.298.9394 during business hours (M–F: 9:30 a.m.–5:30 p.m. PT, Sat: 10 a.m.–2 p.m. PT).

What is loan subordination?

In general terms, loan subordination is a process whereby various loans associated with a home are ranked in order of priority. The mortgage on a home is usually assigned the first ranking, followed by any other loans that have a lien of some kind attached to the house. In many cases, when a homeowner wishes to refinance their mortgage, they need to go through the subordination process in order to complete the refinance transaction. During subordination, Salal is often able to give permission to the mortgage lender to bypass the lien we have on the items or upgrades financed through Salal, allowing the refinance transaction to be completed.

It’s important to note that loan subordination rules differ from state to state and there are a small number of counties around the U.S. that don’t allow loan subordination.

Which types of loans don’t qualify for subordination?

Reverse mortgages do not qualify for subordination.

How long does the loan subordination process take?

The speed of this process depends on the county where the UCC has been filed and can vary quite a bit depending on that county’s process. Some counties can take three months or more.

Waiting on a county to finish the UCC filing can be a particular issue for homeowners who want to refinance their mortgage soon after receiving their Salal loan. In these cases, the loan subordination process can’t begin until the county in question has completed the UCC filing.

In general, we recommend that you contact us about loan subordination as early as possible to avoid delays in your refinancing transaction.