content with leaving the property is to transfer the property to someone else and have them assume the mortgage. This means that the new owner of the property takes over all of your obligations under the mortgage, and the lender can pursue them for payments. However, if the new owner fails to pay, the lender still may be able to pursue you for any deficiency. In some cases, a due-on-sale clause in a mortgage will restrict or prevent an assumption of a mortgage, but federal and state laws have limited the application of these clauses.
MORTGAGE ASSUMPTION WHEN SELLING A HOME
A mortgage assumption may be a useful tool for homeowners who are willing to leave their home after missing payments on their mortgage. This involves selling or otherwise transferring the property to a new owner, who then takes over the mortgage and the obligation of making payments under it. The new owner must comply with all of the terms of the mortgage, just as the original owner did, and the mortgage servicer has the same obligations toward the new owner that it did toward the original owner. Some mortgages will state explicitly that the mortgage can be assumed if the homeowner transfers the property to someone else. Even if the mortgage contract does not address this issue, state laws generally provide that a mortgage can be assumed. However, the new owner will need to establish their eligibility to assume the mortgage and get approval from the lender. This involves passing a credit check and providing proof of employment, among other things.
DUE-ON-SALE
A key situation in which a mortgage might not be assumed is when the contract includes a due-on-sale clause. This states that the full balance of the loan will become due as soon as the home
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