FHA Legal Document

FHA LOAN ASSUMPTION AGREEMENT

This FHA Loan Assumption Agreement ("Agreement") is made effective as of by and between Assignor Name: whose address is and Assignee Name: whose address is (each a "Party" and together the "Parties"). The mortgage subject to this Agreement is held by Mortgagee: and encumbers the real property commonly known as . FHA Case Number: Loan Number: Original Mortgage Date: .

RECITALS

WHEREAS, Assignor is the current borrower obligated under the mortgage and note described above and has agreed to transfer ownership of the Property to Assignee; and

WHEREAS, Assignee desires to assume the obligations of the mortgage and note and to be bound by the terms of the FHA-insured mortgage subject to FHA approval where required under applicable FHA regulations; and

WHEREAS, the Parties intend that this assumption comply with HUD/FHA requirements and that the mortgagee's consent and any FHA or HUD consents required for an assumption shall be obtained pursuant to the terms set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. ASSIGNMENT AND ASSUMPTION

1.1 Assignment. Assignor hereby assigns, transfers and conveys to Assignee all of Assignor's right, title and interest in and to the mortgage, the note secured thereby, and related loan documents to the extent assignable under applicable law and the loan documents.

1.2 Assumption. Assignee hereby accepts, assumes and agrees to perform and be bound by all duties, obligations and liabilities of Assignor arising after the Effective Date under the mortgage, the note and related loan documents for amounts accruing or outstanding as of the date of assumption, subject to the terms and conditions of this Agreement and any FHA/mortgagee approvals required by applicable loan program rules.

2. CONSIDERATION

2.1 Consideration. In consideration for the assignment and assumption, Assignee shall pay to Assignor the sum of (the "Consideration") and shall pay any assumption fees, closing costs and other charges required by the mortgagee or FHA.

2.2 Application to Loan. Any amounts paid by Assignee that are required to be applied to outstanding loan principal, interest, escrow, or charges shall be applied in accordance with the mortgagee's customary procedures and FHA direction.

3. FHA AND MORTGAGEE APPROVAL

3.1 Condition Precedent. Assumption is expressly conditioned upon obtaining any required written consent from the mortgagee and, where applicable, written approval or endorsement by the Federal Housing Administration. The Parties acknowledge that FHA approval may require underwriting and documentation, and that FHA or the mortgagee may impose conditions to be satisfied prior to final approval.

3.2 Failure of Approval. If written approval required by the mortgagee or FHA is not obtained within days following the Effective Date, this Agreement shall be voidable by either Party, and any funds held in escrow for the transaction shall be disbursed as provided in the escrow instructions or otherwise returned to the payor.

4. REPRESENTATIONS AND WARRANTIES

4.1 Assignor Representations. Assignor represents and warrants that: (a) Assignor is the lawful owner of the Property subject to the mortgage; (b) there are no defenses, offsets or counterclaims against the enforceability of the mortgage or note other than those previously disclosed in writing to Assignee and mortgagee; and (c) Assignor has not transferred any interest in the Property other than as disclosed to Assignee.

4.2 Assignee Representations. Assignee represents and warrants that: (a) Assignee has the capacity to assume the mortgage and perform the obligations hereunder; (b) the information provided to the mortgagee and FHA in connection with this assumption is and will be true, complete and correct; and (c) Assignee has inspected the Property or has had the opportunity to do so.

5. RELEASE; INDEMNITY

5.1 Release. To the extent permitted by the mortgagee and applicable law, upon written acceptance by the mortgagee and FHA (if required), Assignor shall be released from future liability under the mortgage and note for obligations accruing after the effective date of the mortgagee's release. Assignor acknowledges that release is within the mortgagee's sole discretion.

5.2 Indemnity. Each Party agrees to indemnify and hold harmless the other Party from and against any loss, liability, cost or expense (including reasonable attorneys' fees) arising from any breach of the representations, warranties or covenants of the indemnifying Party under this Agreement, except to the extent such loss arises from the indemnitee's own gross negligence or willful misconduct.

6. DEFAULT; REMEDIES

6.1 Default by Assignee. Any failure by Assignee to perform payment or other material obligations under the mortgage, note or this Agreement shall constitute a default. In the event of default, the mortgagee shall have the rights and remedies available under the mortgage, note and applicable law, including but not limited to acceleration of the debt, foreclosure, and pursuit of any deficiency.

6.2 Remedies Cumulative. The remedies provided in this Agreement are cumulative and in addition to any other remedies available at law or in equity.

7. HUD/FHA COMPLIANCE

The Parties acknowledge and agree that FHA and HUD regulations and requirements applicable to the loan take precedence where they impose obligations or conditions on the Parties, and the Parties shall comply with all applicable HUD/FHA requirements, including but not limited to documentation, underwriting, certifications, and any limitations on assumption or release.

8. NOTICES

All notices, demands and communications required or permitted hereunder shall be in writing and shall be deemed delivered when hand-delivered, sent by nationally recognized overnight courier, or three business days after deposit in the United States mail, postage prepaid, addressed to the addresses specified in this Section or as otherwise designated in writing.

9. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located, without regard to its conflicts of law principles. The Parties agree that any action arising out of this Agreement shall be brought in the state or federal courts of that State.

10. ENTIRE AGREEMENT; SEVERABILITY

This Agreement, together with any written approvals, escrow instructions, and other documents referenced herein, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether written or oral. If any provision of this Agreement is held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it enforceable, and the remaining provisions shall remain in full force and effect.

11. AMENDMENT; WAIVER; COUNTERPARTS

No amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by the Party against whom enforcement is sought. Failure or delay by any Party in exercising any right shall not operate as a waiver. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

12. ADDITIONAL PROVISIONS

The Parties acknowledge that any FHA or mortgagee-required certifications, affidavits, or release forms will be completed and submitted contemporaneously with this Agreement and will form part of the transaction documentation.

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