source:
  type: guide
  id: hud-4000-1-iii-c-assumptions
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — c. Assumptions
    (05/09/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — c. Assumptions
    (05/09/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-c-assumptions-full
  canonical_id: hud-4000-1-iii-c-assumptions-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — c. Assumptions
    (05/09/2022)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — c. Assumptions
      (05/09/2022)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'c. Assumptions (05/09/2022) i. Conditions for an Assumption
      At the option of the Lender, an existing Title I Loan may be assumed, subject
      to the following conditions: • a determination by the Lender that the assumptor
      is eligible; • a determination by the Lender that the assumptor is an acceptable
      credit risk based on HUD’s underwriting requirements; • the execution of an
      assumption agreement that is satisfactory to the Lender and is signed by the
      assumptor and the original Borrower(s) or previous assumptor(s) at the time
      of assumption. This agreement must obligate the assumptor for repayment of the
      Loan so that the original Note is valid and legally enforceable against the
      assumptor; and • prior to execution of the assumption agreement, the Lender
      must provide the assumptor with a Notice to Borrower of HUD’s Role and obtain
      the assumptor’s acknowledgment. The Loan to be assumed may be Delinquent. The
      security may be transferred to a new eligible Borrower. ii. Release of Liability
      If the conditions above are met, the Lender at its option may release the original
      Borrower(s) and any intervening assumptor(s) from liability for repayment of
      the Title I Loan. Approval from HUD is not required. The Lender must retain
      documentation of the release in the case binder. iii. No Release of Liability
      If a Lender opts not to release the original Borrower(s) and intervening assumptor(s),
      the Lender must comply with all the servicing requirements as they pertain to
      the previous Borrowers/assumptors as well as with the current Borrower/assumptor.
      In particular, the Lender must mail the Notice of Default and Acceleration to
      previous Borrowers/assumptors. If a Lender does not formally release the original
      Borrowers/assumptors at the time of the assumption then the Lender must use
      caution not to inadvertently release them during the servicing and liquidation
      of the Loan. The requirement that the Lender maintains and assigns to HUD a
      legally enforceable Note pertains to any Borrower who was not officially released
      from liability. III. SERVICING AND LOSS MITIGATION C. Title I Insured Programs
      1. Title I Property Improvement Loan Program Handbook 4000.1 1543 Last Revised:
      11/26/2025 iv. Assumption Fee The Lender may charge up to 1 percent of the unpaid
      principal balance as a fee for approving the assumptor and preparing the assumption
      agreement. v. Reporting an Assumption to HUD Lenders must report the assumption
      to the FOC in order to have the current Borrower’s name reflected on future
      insurance charge billing statements. When reporting an assumption, the Lender
      must supply the FHA case number, the name of the original Borrower and the name(s)
      and Social Security Number(s) (SSN) of the assumptor(s).'
  judgment: false
