Posted by ken on April 23, 2005 at 18:10:46:
The seller is responsible since she signed the note, not you.I would not give him anything except timely payments.
nonqual assumable mortgage, lender doesn’t agree - Posted by Ben (FL)
Posted by Ben (FL) on April 23, 2005 at 16:53:17:
Here’s a first for me: I ran across a private mortgage with no due on sale clause. It’s for a duplex with great cash flow. The owner is old and tired, and ready to quit. She deeded me the property, and I called the lender to introduce my self, tell him I had assumed the mortgage, and that I would be making the payments from now on. He flipped out. Aside from ridiculous claims that “Title cannot be transferred on properties where there is a mortgage” he insists that he “is not secure” because his agreement is with the seller, not my company, and if the seller is not liable and he has to foreclose, then it’s more difficult and costly. What he really means is, he has her intimdated, and if she can’t pay he can get her to deed the property back without going through forelcosure, whereas with my company, he’d have to pay a lawyer.
Here’s my question: What am I required to give him? I will send him a copy of the recorded deed, and I have written up a copy of the Simple Assumption Agreement that MIdland Mortgage sent me on another property. There is not a single word in his note or mortgage about transfer of the property. Is the seller still liable after I assume the mortgage? I know FHA has rules that say they are, but surely those do not apply to privately created mortgages, do they?
Thanks
Ben
nonqual assumable mortgage, lender doesn’t agree - Posted by JohnBoy
Posted by JohnBoy on April 23, 2005 at 19:21:01:
What does the note say about assuming it? I suspect it says nothing. Nothing about assuming nor nothing about having a right to call the loan upon transfering the title.
If this is the case, then the seller remains liable. The only way the seller can be released from liability is if the note holder releases the seller. I doubt that will ever happen. Unless you step up to show you are better qualified and the note holder willing to accept you as being liable in exchange for releasing the seller from liability.
I wouldn’t send anything to the note holder unless you are willing to become liable for the note. Otherwise you could be held liable along with the seller if you send him anything indicating you are assuming the note. If you try to formally assume the note then you are saying you are agreeing to take it over and be held liable for all the terms of the note. Now the note holder has the seller and you liable for the note! Unless the note says anything about the note holder agreeing to release the seller upon selling the property where the buyer assumes the note then the note holder has no obligation to release the seller regardless of whether someone else assumes it or not. The seller remains liable until the note is paid. If you formally assume the note you become liable for it along with the seller.
Since the note says nothing about having a right to call the loan due upon any transfer of title, then I wouldn’t assume it. I would just buy the property subject to the existing note and just make the payments!
Just because the note doesn’t say it’s not assumable doesn’t make it assumable without the note holder’s consent. If the note doesn’t address anything about note holder having a right to call the loan in the event of a transfer of title, then there is nothing from preventing you from buying the property subject to the existing mortgage where you just make the payments. But the seller remains liable unless the note holder releases her from the note, accepting you as the borrower by allowing you to formally assume it. If you provide the note holder with anything stating you are assuming it, then you could become liable for the note along with the seller if the note holder refuses to release her.