Code of Massachusetts Regulations
761 CMR - MASSACHUSETTS HOME MORTGAGE FINANCE AGENCY
Title 761 CMR 22.00 - Servicer's Guide
LOAN SERVICING
Section 22.24 - Change of Ownership; Assumptions

Universal Citation: 761 CMR 22.00 MA Code of Regs 22.24

Current through Register 1531, September 27, 2024

(1) Sales subject to Existing Mortgages. MHFA will allow the transfer of properties subject to the terms of the Mortgage Loan on all FHA/VA Mortgage Loans. Servicer shall make any disclosure necessary, assure that all insurance policies reflect the new ownership if required by FHA/VA and take any action necessary to continue the benefits of the FHA/VA insurance or guaranty without interruption. Servicer need not notify MHMFA of any such transfer subject to the terms of an existing mortgage, where there is no right of acceleration upon transfer of ownership, unless it becomes necessary at some later date to communicate with MHMFA regarding any servicing matter. At that time, Servicer shall advise MHMFA of the name of the new owner, the date title was acquired, and the terms of the sale, if known.

(2) Assumptions.

(a) FHA/VA Mortgage Loans -- When a property securing an FHA/VA Mortgage Loan is sold and the purchaser assumes the liability of the obligation, MHMFA will concur in the decision reached by FHA or VA as to the acceptability of the new Borrower and whether or not the prior Borrower is to be released from liability. Servicer shall make any disclosure necessary, assure that all insurance policies reflect the new ownership and comply with all requirements of the FHA or VA in obtaining their approval to the change of liability.

(b) Conventional Mortgage Loans -- MHMFA believes that the right of acceleration upon transfer of ownership is an invaluable tool of any prudent private institutional mortgage investor in assuring that Borrowers are responsible for making payments. Servicer shall use its best efforts to learn of the sale or transfer of a mortgaged property or any other event giving rise to the right of acceleration.

(c) Approval by Servicer -- Servicer has the authority to approve an assumption without obtaining approval from MHMFA provided the new Borrower meets the eligibility criteria of the MHMFA Loan Participation Program.

Documentation supporting the purchaser's satisfaction of the eligibility criteria of the MHMFA Loan Participation Program must be made part of the Loan File but should not be forwarded to MHMFA unless specifically requested. Servicer shall notify MHMFA of the name of the assumptor.

MHMFA has no objection to the release of the original Borrower upon assumption by a satisfactory purchaser.

(d) Approval by MHMFA -- MHMFA will consider on a case basis assumptions by purchasers who do not conform exactly to the requirements outlined above. (See 761 CMR 21.11 for general requirements.) Servicer should submit their recommendations accompanied by an application for an exemption by the proposed Borrower; a current credit report of the proposed Borrower; an executed copy of the contract of sale; approval of the private mortgage insurance carrier; any other pertinent information.

(e) Disclosure and Compliance -- Servicer shall make any disclosure and perform any acts necessary to comply with the requirements of any applicable law or regulation including, but not limited to, the Truth in Lending Act.

(f) Insurance Policies -- Servicer shall assure that all insurance policies reflect the new ownership and take any action necessary to continue the benefits of insurance without interruption.

(3) Fees. Servicer may charge and retain a fee for the processing of an assumption of a Mortgage Loan in which a Loan Participation is purchased by MHMFA where it is the common practice of private institutional mortgage investors in the area. Such fee should bear a relationship to the actual costs involved and be in accordance with amounts allowed by FHA, VA or other authority having jurisdiction.

(4) Preparation of Documents. When an assumption or novation is approved by MHMFA, Servicer shall prepare the appropriate documents and shall forward them to Seller for execution. Servicer is responsible for delivering an executed copy of any document to all interested parties and retaining a copy in the Loan File. Where it is the custom of private institutional mortgage investors, Servicer shall arrange for the recording of any documents, the cost of which may be borne by Borrower where permissible. Servicer shall take all steps commonly taken by private institutional mortgage investors to assure the priority of the existing first lien.

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