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Which of the following is true about mortgage assumptions?

Rationale

The seller may or may not be released from liability.

In a mortgage assumption, whether the seller is released from liability for the mortgage depends on the specific terms of the mortgage agreement and the lender's approval. If the lender allows the assumption and does not release the seller, the seller remains liable for the mortgage even after the property is transferred to the buyer.

A (The buyer is relieved of personal liability.) YOUR ANSWER

In a mortgage assumption, the buyer typically assumes the existing mortgage and becomes responsible for the payments. However, this does not automatically relieve the buyer of personal liability unless specified in the agreement. The buyer may still be held accountable if they fail to make payments.

C (The buyer is required to sign a new mortgage note.) YOUR ANSWER

In most cases of mortgage assumption, the buyer does not sign a new mortgage note but rather assumes the existing terms of the mortgage. A new note may be required only if the lender mandates it, which is not a standard condition for all assumptions.

D (The mortgagee automatically releases the seller upon receipt of a warranty deed.) YOUR ANSWER

The mortgagee does not automatically release the seller from liability simply upon receiving a warranty deed. The release of liability is contingent upon the lender's approval and the terms of the mortgage, and such a release must be formally granted.

Conclusion

When a mortgage is assumed, the key factor is that the seller may remain liable unless explicitly released by the lender. This situation underscores the importance of understanding the terms of the mortgage agreement, as the seller's liability varies based on lender policies and the specifics of the assumption. Buyers and sellers must navigate these conditions carefully to ensure clarity regarding their respective responsibilities.

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