Is Loan Assumption Viable?

Q: Can we sell our home by allowing the buyers to assume our loan?

A: Not likely. Mortgages can be "freely" assumable, meaning you don't need the lender's permission for an assumption, or they can be non-assumable. However, few loans have been freely assumable in recent years. For instance, FHA loans have not been freely assumable since Dec. 15, 1989; for VA financing freely assumable loans ended March 1, 1988. I have not seen a freely assumable conventional mortgage in years, if not decades.

Some argue that by using a land contract or wraparound financing you can effectively sell a home and leave the financing in place without telling the lender. Sellers who hear such proposals should be aware that the loan agreement is with them and not the buyer. If a payment is late or not made it is your credit that will suffer. If the lender finds out it may attempt to call the loan. There are also questions regarding insurance, tax deductions, etc.

If a buyer suggests the assumption of your mortgage please speak first with a local real-estate attorney - and sign nothing until you do.

Q: We have just sold our house and are preparing to move. Can we take our raised garden boxes (wooden boxes filled with dirt) with us, or are they part of the sale? Nothing was mentioned about them in the agreement.

A: We usually think of "fixtures" as either items firmly attached to, or intended to remain with, the property, or as items specifically listed in the sale agreement that will go to the new owners with the house.

This gets us into an array of issues. Once, for example, someone asked if they could move a septic tank, something that surely seems attached to and intended to remain with the property. Microwave ovens are different - a microwave sitting on a counter would be considered personal property because it can be unplugged and readily moved, while a built-in microwave is a fixture because it's firmly attached to a wall or cabinets.

Your listing agent is thought to represent you, the owner. It's difficult to have your representative say that a house is for sale with raised garden boxes and to then seek their removal.

The suggestion here is to speak with buyers and nicely ask if it would be OK to take some or all of the garden boxes. Who knows, maybe the purchasers were hoping to get rid of them ...

Q: How much should I pay my lawyer for closing?

A: Legal fees vary and depend in large measure on where you live and the extent of the attorney's activities. For specifics, speak with local real-estate brokers, legal clinics and lawyers for additional information.

One useful way to better understand closing costs and related issues is to request that the settlement provider give you a copy of the closing papers 24 hours before settlement. Your attorney can then review the forms without actually having to attend the closing unless necessary. Be sure to make such a request to the closing agent in writing and well in advance of settlement.

Q: What's the difference when foreclosure is postponed versus placed on hold? Is a traditional modification better then the Obama Plan?

A: Whether a foreclosure is placed on hold, postponed or otherwise delayed, the bottom line is that the process has been put off. This may be good news if the lender and borrower are trying to work out a deal, or bad news if the lender is merely waiting for some event before going further, such as the end of a state-mandated foreclosure moratorium.

As to whether federal or private foreclosure efforts are better, either is great if your home can be saved. A loan modification or payment plan may not be a cure-all, however. Government reports show a majority of borrowers are delinquent again after a few months, in part because modification and workout programs often result in no cost savings or, in many cases, in even higher monthly costs.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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