CA Enacts Law Requiring Lenders to Allow Certain Mortgage Assumptions

California recently enacted a law that will require conventional mortgage loans secured by dwellings with multiple borrowers to include provisions allowing existing borrowers to assume another borrower’s portion of the mortgage in certain circumstances.

Specifically, a conventional home mortgage loan originated on or after January 1, 2027, and secured by owner-occupied residential real property containing four or fewer dwelling units with multiple borrowers must include provisions to allow for any of the existing borrowers to purchase the property interest of another borrower on the loan by assuming the seller’s portion of the mortgage in connection with a decree of dissolution of marriage, a legal separation agreement, or an incidental property settlement if the assuming borrower qualifies for the underlying loan, as determined by the lender.