Assumption of an FHA-insured mortgage is a servicing function where the responsibility of the mortgage is acquired by another person through either Simple or Creditworthiness process. Individuals may assume mortgages originated prior to December 1, 1986, by utilizing the "Simple Assumption" process. For those mortgages originated on December 1, 1986 and thereafter, HUD placed certain restrictions on the assumption of those FHA-insured mortgages and those mortgages have to go through the Creditworthiness Assumption process. Please refer to the Assumption Chart for 1) Mortgage Original Closing Date, 2) Owner-Occupancy Requirement, and/or 3) Investor Limitation.
Question 1 - If a mortgagor who assumes a mortgage refuses to go through the creditworthiness process, should the mortgage be called due and payable, even if the mortgage is current?
Answer - If the assumptor falls within one of the categories stated in the assumption chart referenced above and the assumptor refuses to go through the creditworthiness process, then the mortgagee must request approval from the Secretary to accelerate the mortgage, if permitted by applicable state law. See HUD Handbook 4330.1 REV-5, Chapter 6.
Question 2 - When determining the possibility of an assumption, must the mortgage be underwritten or can an Approved Direct Endorsement (DE) Underwriter sign off on the Analysis Worksheet?
Answer - An approved DE underwriter must determine the creditworthiness of the assumptor. Creditworthiness is determined by completing the Analysis Worksheet. See HUD Handbook 4330.1 REV-5, Chapter 6.