Does the seller think his loan is assumable?

Seller needs to provide a copy of the note, riders, and all the documents.

Lender will never give note to a buyer. Servicer is the company buyer's agent will deal with.

All assumptions are full documentation. Buyer provides 2021 2022 IRS returns, w-2, and 1099's; bank statements past three months; identification; paystubs for past 30 days; contract- yes it must be a signed contract to apply; preliminary title report; any signatures that the servicer requests.

The terms that were offered when the loan was approved are still the terms the servicer is going to hold. If seller put 20% cash down, they want that. FICO score should be a match within a limit of 5 points. When replacing a borrower in an assumption the Servicer and the Trustees who own the note want the same quality borrower. Seller carry backs frowned upon.

If the note is a VA it is the legal responsibility of the seller agent and buyer agent to inform the seller veteran of the risks and perils they accept. Seller veteran loses some or all eligibility to use VA loans again. Agents will need to know the percentage and there are forms to sign.

An assumption is going to take 60 days. 

There is NO loan officer collecting papers or pushing it through. If you worked with servicers on short sales, they are the same understaffed institutions. Servicers make zero money doing this, it is a cost of about $7000 to the servicer to process, answer calls, compile documents, underwrite... so you need to be the most organized file to get it done.

If you have a loan officer friend you might ask them to review the paperwork before submitting. They cannot accept any money for doing this, it would be an act of charity. 

All the paperwork should be mailed in ONE package and emailed in a google doc file where you, the buyer, and servicer can see it. This really hurts on privacy ... 

Both agents need written permission from buyer and seller to speak to the servicer. You are going to send this every time you call.

Since this is a losing proposition for the trustee and servicer be organized, keep notes, you are going to get different people who never saw the file.

Servicer is not regulated to any time frame to answer anything. This is hugely different than the 30 day time frame for an answer on a loan application. 

Servicer can deny for many reasons: FICO being the most popular, loan to value difference, being a stand alone first with no secondary financing, income insufficient...

If your buyer is self employed and has multiple tax returns or losses, this is something you need to ask on day one as will be a road block. You as an agent are accepting a role that you rarely negotiate with a servicer. If you did short sales, I believe you are up to the task.

I just had a VA loan assumed - I represented the seller who was also buying a home with a VA loan in another state. We had absolutely no issues and in order for any of this to happen, I had to tell the BA that we DID have an assumable VA loan! As a BA,

In our Listing Agreement is a section for acceptable terms for the Seller. Cash, VA,FHA, Assumption of Mortgage, Owner Financing are all options that could be discussed by the Listing Agent at this time.

Is the mortgage assumeable is an acceptable question by either the Listing Agent or Buyers Agent. The buyer must still qualify with the Lender. There is also usually a difference in Market Price and Mortgage Balance, so the Buyer may not have the cash to cover the spread and a 2nd Mortgage for the difference would be necessary. It maybe a better option for the Buyer to secure new financing, with lower out of pocket cash even With a higher interest rate? 

While current interest rates verses lower existing mortgage rates are one concern, it is not the only issue with assuming a mortgage. A detailed conversation by the Buyer with their Lender for options should be advised. 

We currently are in contract with two assumed mortgages - both VA. If you are the listing agent, and the seller permits, I would put in agent remarks that the loan is assumable and at whatever interest rate it is.  For one of our buyers, they are assuming a 2.5% VA loan - and are not veterans. The only thing a little different was the lender required them purchase in their personal names rather than in the trust that they usually use to purchase real estate. But at that interest rate, it was all worth it!

Calling on C.G. Caroline Gerardo whose knowledge and experience are exceptional. 

My take is that a buyer will be challenged assuming a mortgage. 

A great question for our #1 lender in CA Mr. Jason E. Gordon 

There are very, very, few mortgages that are assumable. When one is at a low rate, the seller's agent is likely to advertise this fact. 

A question for Caroline Gerardo who knows plenty!

Years ago, most mortgages were assumable. Then, rates spiked up into the teens and lenders were forced to allow buyers to assume low rate loans. They lenders learned from that experience. These days, loans, other that VA, are rarely assumable.

VA loans are assumable so there should be paperwork stating such which the seller needs to produce for other assumable notes

We bought our first house up north VA and the buyer assumed the mortgage when we sold. This was many years ago so things may be different now but we bought just before interest rates skyrocketed in the late 70s and constantly had agents calling asking if we wanted to sell because our 8% was assumable so very attractive to buyers.

When we sold, the LA included the assumable in the LA agreement and we sold the day it hit the market, partly due to being in a highly desirable area where people rarely sold and partly due to the 8% assumable.

From contract to close took about 30 days, much faster than we anticipated so we had to do a leaseback for a couple weeks to finish packing and moving. The process may be different now but a good LA will promote an assumable, especially in a high interest rate market.

When applying and then getting a mortgage, it either says it is or is not assumable. As far as bank motivation? To either bring current or hold is something their business model looks at. 

Ultimately, the Mortgage Servicer would be the first call, and it would be the existing Borrower who would initiate that call. Despite their importance in the escrow itself, neither of the Realtors are going to be able to make specific loan alteration requests on behalf of the existing borrower.

It bears noting that most of the loans desirable to be assumed are Conventional 30 year fixed mortgages acquired during the pandemic (that have a 2 or 3 in front of the decimal point). If you look at the final Closing Disclosure (CD), you will see that most of them are NOT assumable.

Below is a deep dive AR Blog that I wrote on this topic. Although the slant is for Divorce Attorneys, you will find 90% of the article speaks solely to Mortgage Assumptions. Hope this helps!

https://activerain.com/blogsview/5794130/divorce-equity-buyouts---don-t-assume-the-mortgage-assumption

Thank you Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets for looping me in!

Just ask

most mortgages have due on sale clauses in the contracts and not assumable.  And sometimes the original borrower remains ultimately responsible for payments if the buyer defaults, so it's not something I would ever advise a seller to do.

There are some very good answers here. I would speak to the LA first and find out if it is assumable and if the seller is willing to go that route.

Could just write it into the offer.

Your buyer may want to go around the agents and talk to the seller if it is important enough to them.  Then both parties could instruct their agents to write this into the offer.

Have you considered a Wrap Around Mortgage ( to preserve the Lower Interest Rate ) 

You're going to have to go thru the LA to get that question asked. How do YOU know it's assumable? Why go thru all the gyrations if it's not?

Debe Maxwell, CRS just did one & it turned into a sweet deal for those buyers.