Finance
What is a mortgage assumption and what does it mean for the original borrower?
AThe original borrower is immediately released from liability
BA buyer takes over the existing loan; the original borrower may remain liable unless released by the lender✓ Correct
CThe lender must approve all assumptions
DAssumptions are prohibited on conventional loans
Explanation
In a mortgage assumption, the buyer takes over the seller's existing mortgage. Unless the lender grants a novation releasing the seller, the original borrower may remain liable if the buyer defaults. Many conventional loans have due-on-sale clauses preventing assumptions.
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