Assumption Fee: The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of a mortgage.
MHC then purchases the home at closing and leases it back to the prospective homebuyer for a term of 39 months, at which point the program participant can assume the outstanding Freddie Mac loan for a one percent
assumption fee. The homebuyer also enjoys the benefit of any appreciation through a forgivable grant from MHC.
In the case where interest rates are higher than the loan rate, a lender may arbitrarily institute
assumption fee; thus, terms of assumption should be negotiated and specified in the agreement.
There are two current mortgages on the property which must be assumed from Sovereign Bank; first is $5,350,000 at 5.4% with a 30 Year amortization and the second is $545,000 at 7.25% both with seven years left on the original ten year term with a 1%
assumption fee. First vice president of sales Stephen R.
UDR said that the transaction is expected to be funded through the issuance of up to USD 753m of UDR OP units issued at USD35 per unit, the assumption of USD 90m of debt and USD 65m in cash, inclusive of transfer taxes and loan
assumption fees.
"It might be wise to walk away from the $50,000 spent on attorney fees or
assumption fees and just say, 'I can't go any further because it's going to cost me more,'" Cherry said.
* The cost of assuming the debt (higher interest rate, shorter maturity, more collateral or covenants and
assumption fees).
Ancillary income, including late charges, insurance fees,
assumption fees, and the like, contributed 17 percent of gross revenues, or $49 per loan.
The cash stream is comprised of the servicing fee, income related to any escrows, and ancillary income such as late fees
assumption fees, and so forth.