Assuming my home loan...

[Mark E]

I have a potential homebuyer a trust worthy friend that has great credit and income/assets etc. And with one of my properties im upside down in terms of value etc. Im on a interest only loan with no pre-payment penalty. Is it possible now with my current lender I have my loan with for someone to assume the loan and myself being taken off? Are they more strick in terms of assuming the loan if it can be transfered? Because in all honestly its going to be hard for me to keep up with these payments since the economy has taken a dump and prices like gas are on the rise. If I explain to the lender that I won't be able to survive making this payments however I have someone that wants to the assume the loan that can make these payments will that work? Any advice? Has anyone performed this type of transaction before? Thanks..

[Mel Hare]

I beleive to assume a mortgage it has to be a FHA or VA mortgage. If you really trust your friend you could do Sub 2 deal.

[Jon Holdman]

Unless you're talking about a commercial loan, its almost certainly not assumable. It contains a "due on sale" clause that says it must be paid off when ownership in the property is transfered.

That said, people to "subject to" deals all the time where a property is sold subject to the existing loan. The buyer gets a deed to the property, but the loan stays in place. You have to trust your friend will continue to make the payments because the loan stays in your name. The lender has the right to call the loan due, but may choose not to do it as long as they're getting paid. You will remain obligated to make the payments.

Why would your friend (or any other buyer) take over a loan that's have a higher balance than the value of the property? Can you just sell it from what its really worth and pay off the difference? It sounds like you have other assets. A bank will not take a short sale if you have assets that could be used to make up the difference.

Jon

[Mark E]

Originally posted by "Wheatie":

Unless you're talking about a commercial loan, its almost certainly not assumable. It contains a "due on sale" clause that says it must be paid off when ownership in the property is transfered.

That said, people to "subject to" deals all the time where a property is sold subject to the existing loan. The buyer gets a deed to the property, but the loan stays in place. You have to trust your friend will continue to make the payments because the loan stays in your name. The lender has the right to call the loan due, but may choose not to do it as long as they're getting paid. You will remain obligated to make the payments.

Why would your friend (or any other buyer) take over a loan that's have a higher balance than the value of the property? Can you just sell it from what its really worth and pay off the difference? It sounds like you have other assets. A bank will not take a short sale if you have assets that could be used to make up the difference.

Jon

I mean in your opinion with the current situation with the market and loans would they bend some of there policies and and let someone else that is quaified assume the loan if I admit to them that I can no longer make these payements as relief to the current borrower? Unless they rather have a foreclosure or have the payments still come with different borrower?

[Jon Holdman]

I believe it's very unlikely they would allow the loan to be assumed. But, call and ask. Who knows.

Jon

[Account Closed]

Originally posted by "sguerra923":

I mean in your opinion with the current situation with the market and loans would they bend some of there policies and and let someone else that is qualified assume the loan if I admit to them that I can no longer make these payments as relief to the current borrower? Unless they rather have a foreclosure or have the payments still come with different borrower?

1. Ask the lender. You can not tell what they would do until you ask. They might offer to restructure the loan payments so you can afford it.

2. Assumptions are not common. If the friend is really able to qualify they technically could get a new loan.

3. The value of the building is an issue.

Note that the lender might not own the asset (the note plus the security agreement that is a lien on your property). They may have sold it and are only servicing the loan. Hence they may not have the same interest you would expect in working with you. If they are really large lender it might be hard to get a straight answer to what they can do unless they have a program in place to work with people. Some lenders have created specialized teams to do work out agreements. Mostly for people who are still current but are facing problems.

John Corey