Taking Over Loan: Let the Seller Beware
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Robert J. Bruss’ reply to the home seller wanting to accept $10,000 for his or her equity (“Pros and Cons of Letting Buyer Take Over Your Mortgage,” Oct. 17) was riddled with bad advice.
First, all lenders object to a buyer’s taking over payments. It is not a technicality. Taking over payments violates the “due on sale clause,” which is bank fraud, punishable by jail time and civil penalties.
In addition, the seller is at risk for the following:
1) There is no guarantee once the buyer takes title that he or she will continue the mortgage payments even though the seller (now the renter) is making rent payments.
2) If the home loan goes into default, it’s the (former) owner’s credit that is damaged, not the new buyers’.
3) If the home is foreclosed on, it will be the former owner who is saddled with the deficient tax payments and supplemental taxes, not the new owner.
DANIEL DOBBS
Via e-mail
The writer is a mortgage broker.
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