What is a workout assumption?


A workout assumption is possible when there is a candidate to assume an existing mortgage to avoid foreclosure. The potential candidate for assuming the mortgage usually has to undergo assessment by the lender. The existing owner of the property will be exempt from any mortgage obligations once the workout assumption becomes a fact.

Mortgage Workout Assumption as a Way to Avoid Foreclosure

Usually, when foreclosure is possible, there several ways out:

  • Forbearance agreement, in case the financial difficulties experienced by the homeowner are short-term;
  • Modification of mortgage terms;
  • Home loan workout assumption;
  • Pre-foreclosure sale - with this option you are allowed to sell your property for at least 95% of appraised value to satisfy your mortgage debt;
  • Partial claim - a partial claim allows for an interest-free loan from HUD to become current on your mortgage. You have to satisfy HUD qualification requirements for a partial claim option;
  • Deed in lieu of foreclosure - the lender may accept ownership of the property as satisfaction of your debt; however, the lender won't always agree to do that; 
  • Mortgage short sale.
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