Contrast “Assumptions” And Buying “Subject To” The Loan?
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In the general case, with an “assumption” a lender will first pursue the new borrower and then come after the original debtor if there is a default.
If the loan was taken “subject to” the mortgage, then only the original borrower remains responsible for the loan in the eyes of the lender.
While it may seem that the new borrower is, er, “home free” by purchasing subject to the mortgage, the new borrower’s credit will be damaged and the original borrower may well take the new borrower to court.
In practice, any change of title will likely be seen by the lender as a “sale” that automatically sets off the “due on sale” clause found in all mortgages.
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