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b. Assumptions (12/30/2025)
i. Assumability of FHA-Insured Mortgages
All FHA-insured Mortgages are assumable. The Mortgagee must not impose, agree to, or enforce legal restrictions on conveyances or assumptions after closing except when:
• specifically permitted by HUD regulations; or
• the restriction had been specified in a junior lien granted to the Mortgagee after settlement.
The Mortgagee must review the mortgage documents to determine what restrictions have been placed on the Mortgage.
Anyone assuming an FHA-insured Mortgage must have a valid SSN or EIN or meet the eligibility requirement exception regarding social security numbers.
ii. Notice to Homeowner
The Mortgagee must send the applicable Notice to Homeowner: Release of Personal Liability to:
• all applicants for FHA-insured Mortgages, before settlement; and
• sellers or buyers who request information on HUD’s creditworthiness review criteria or procedures for assumptions or releases from personal liability.
iii. Fees for Assumptions
The Mortgagees may charge the assuming Borrower a processing fee that is reasonable and customary, as set in Processing Fees and Other Costs for Assumptions.
(A) Allowable Charges Separate from Assumption Processing Fees
The Mortgagee may charge the assuming Borrower reasonable and customary fees not to exceed the actual costs for third party expenses incurred in connection with assumption processing:
• non-refundable fees for credit reports and verifications of employment; and
• up to $45 for fees for the preparation and execution of release of liability forms (form HUD-92210.1, Approval of Purchaser and Release of Seller), where a Borrower requests an executed release of liability form as evidence that the Borrower was released during a previous creditworthiness review.
(B) Refund of Assumption Processing Fees
In the event a Mortgage is not assumed, Mortgagees must refund one-half of its processing fees if the assumptor’s credit is approved, but assumption does not occur for reasons beyond the control of the assumptor.
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III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages
3. Programs and Products - Assumptions (12/30/2025)
(C) Change of Hazard Insurance
The Mortgagee may not assess a fee for processing the assumptor’s request to change hazard insurance coverage when the existing policy has not yet expired.
(D) Section 143 of the Internal Revenue Code of 1986
The Mortgagee must not charge the Borrower any additional fees for ensuring that assumptions of mortgage revenue bond Mortgages comply with requirements of the Internal Revenue Code (IRC).
iv. Notification to HUD of Changes
The Mortgagee must notify HUD via FHAC of assumptions:
• within 15 Days of any change of Borrower; or
• within 15 Days of the date the Mortgagee receives actual or constructive knowledge of the transfer of ownership.
v. Payment of Partial Claim due to Assumption
When the Borrower no longer owns the Property, the Partial Claim becomes due and payable.
At the time of the assumption, the Mortgagee must acquire an official Partial Claim payoff letter from HUD's Servicing Contractor.
vi. Exercise of Due-on-Sale Clause
When a prohibited sale or transfer of the Property occurs, the Mortgagee must enforce the due-on-sale clause by:
• submitting a variance request to HUD via EVARS to accelerate the Mortgage, provided that acceleration is permitted by law; and
• accelerating the Mortgage if approval is granted.
vii. Acceleration of the Mortgage
(A) Requests for Acceleration
The Mortgagee may request approval from HUD to accelerate Mortgages for assumptions made:
• without credit approval; or
• where HUD assumption requirements are not met and the Borrower cannot or will not comply with HUD’s requirements at the time the assumption is discovered.
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III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages
3. Programs and Products - Assumptions (12/30/2025)
(B) Acceleration Not Permitted
The Mortgagee may not accelerate for the assumptions when:
• acceleration for assumption without credit approval is prohibited by state law;
• the seller retains an ownership interest in the Property; or
• the transfer is by devise or descent (with or without a will).
viii. Communication with Borrowers Regarding Assumptions
Upon any inquiry by a seller regarding HUD’s assumption requirements or upon learning that an assumption has occurred, the Mortgagee must:
• attempt to obtain the forwarding address of the selling Borrower;
• advise the selling Borrower to update the mailing address as needed; and
• advise the selling Borrower that any existing PACE obligation that remains with the Property must be fully disclosed to the buyer in accordance with applicable law (state and local) and made part of the sales contract.
ix. Reporting of Defaults on Assumed Mortgages to Consumer Reporting Agencies
If an assumed Mortgage goes into Default, the Mortgagee must not report these Defaults to consumer reporting agencies for former Borrowers, whether those Borrowers remain legally liable for the mortgage debt or have been released from liability. The Mortgagee must notify any Borrowers that remain liable for the mortgage debt that the assumed Mortgage is in Default.
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III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages
3. Programs and Products - Hawaiian Home Lands Mortgages (Section 247 Mortgages) (11/10/2026)