Posted by Rick, the Probate Guy on April 01, 2007 at 17:36:17:
Kenny - The answer to your loan assummability question is answered within the Garn St. Germain Act. If you acquire the property through any one of the nine exemptions, then you’re ok.
I’ve included a summary of the act for your own peace of mind; #5 relates to your situation:
Garn St. Germain Act re: Loan Assumption
This whole issue was settled in the 1982 federal act called the Garn-St. Germain Depository Institutions Act. According to the Act there are only nine exceptions to a lender?s ability to enforce it?s due-on-sale clause and they are:
(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon ?
(1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;
(2) the creation of a purchase money security interest for household appliances;
(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;
(4) the granting of a leasehold interest of three years or less not containing an option to purchase;
(5) a transfer to a relative resulting from the death of a borrower;
(6) a transfer where the spouse or children of the borrower become an owner of the property;
(7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;
(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or
(9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.