Can I Be Liable for Default on the Mortgage While Transferring the Deed to an Ex Spouse?
Full Question:
Answer:
The answer will be a matter of company policy of the lender. The terms of the assumption agreement will determine who is liable for the loan in the interim period. We suggest contacting the lender to find out whether there is a due on sale clause, and if so, whether they will consent to the transfer without accelerating the loan. If there is a mortgage on the property, the contract may violate a due-on-sale clause in the mortgage which the lender may or may not seek to enforce.
Most lenders require that the mortgage or deed of trust contain a due on sale clause. This is an acceleration clause in a loan, calling for payment of the entire principal balance in full, triggered by the transfer or sale of a property. Such a clause permits a secured mortgage lender (federal, state or private) to call the entire unpaid loan balance due and payable immediately if the property securing the loan is sold, transferred, traded, gifted or otherwise disposed of without the lender’s prior written consent.
