source:
  type: guide
  id: hud-4000-1-iii-c-assumptions-2
  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-2-full
  canonical_id: hud-4000-1-iii-c-assumptions-2-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 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. 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. A Lender must not release the
      Borrower or any co-maker or Co-signer from liability under the Note without
      prior approval from HUD. An exception may be possible if there is an assumption.
      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 the servicing requirements
      outlined in this section 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
      and repossess/foreclose against the security in such a way as to preserve the
      legal liability of the previous Borrowers/assumptors. If the 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 2. Title I Manufactured Home Loan Program Handbook
      4000.1 1562 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 Assumptions The Lender
      must report assumptions to HUD in order to have the current Borrower’s name
      reflected on future insurance charge billing statements. An assumption may be
      reported via mail, fax, or email to the FOC. When reporting an assumption, the
      Lender must supply the Title I case number, the name of the original Borrower
      and the name(s) and Social Security Number(s) (SSN) of the assumptor(s).'
  judgment: false
