Home Mortgage

Question

barbara asks:

When is it necessary to include an assumption clause?

Answer

Jessica answers:

It becomes necessary to include an assumption clause in the loan document if you have planned to allow the buyer to assume the mortgage loan at the time of sale of your property.

This clause gives the buyer the responsibility of repaying the loan that was originally borrowed by the seller. But as the original borrower, you will still be liable for repaying the loan provided the buyer defaults and the lender decides to foreclose.

However, if the original borrower gets a release from the lender, then he will be relieved from the liability of repaying the loan.

Niicss answers:

If a creditor has already filed a judgment against your mother for any kind of payment defaults, then that creditor may consider this transfer as fraudulent and can penalize your mother. Otherwise, if she transfers the property to you and you record it, then no one will be able to place lien on the property. However, once the property is in your name, your creditors can place liens on it if you have defaulted on payments.

Source: MortgageFit.com

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