Assumable & Portable Mortgages
Quick Visual Guide
🏠1. What Is an Assumable Mortgage?
- Buyer takes over seller’s existing mortgage (rate, balance, term).
- Buyer covers difference between sale price & loan balance.
- Allowed for FHA/VA; **not** currently allowed for Fannie/Freddie.
💡 Client takeaway: “If assumables go conventional, buyers could grab a seller’s 2–3% rate.”
🔁2. What Is a Portable Mortgage?
- Borrower transfers their current mortgage to a new home.
- Keeps same rate & terms; adds 2nd mortgage or cash if new home costs more.
- Never used in U.S. mainstream lending; FHFA evaluating feasibility.
💡 Client takeaway: “Imagine moving but keeping your old low-rate loan.”
📉3. Why FHFA Is Exploring This
- Americans are locked into ultra-low rates.
- People won’t move → inventory frozen.
- Affordability crushed by today’s higher rates.
🎯 Goal: Increase mobility & inventory without subsidies.
⚠️4. Major Hurdles
- Securitization: Loans tied to specific homes; portability breaks this model.
- Servicing: Assumptions cost money; new workflows required.
- Risk Models: Hard to evaluate new collateral risk.
- Lender Economics: Fewer new loans; revenue impact.
- Regulatory: Would require big changes to guidelines & legal docs.
🚧 Most difficult area: Bond market structure & collateral rules.
📈5. Most Likely Outcome
- Assumable Conventional Loans: Most realistic.
- Portable Mortgages: Long-shot, major structural conflicts.
🔮 Assumables = possible soon. Portables = maybe someday.
✨6. Consumer Benefits if Adopted
- Buyers access low rates again.
- Inventory improves as lock-in fades.
- Sellers gain marketing power.
💬 Your message to clients: “If FHFA approves this, it could reshape affordability overnight.”
